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Ken Yalters, the COO of FreshSkin, asked his cost management team for a product line...

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Accounting

Ken Yalters, the COO of FreshSkin, asked his cost management team for a product line profitability analysis for his firm's two products - Askin and Bskin. The two products are skin care products that require a large amount of research and development and advertising. He received the report below. Ken concluded that Askin was the more profitable product, and that perhaps cost-cutting measures should be applied to the Bskin product. Askin Bskin Total Sales $ 4,000,000 $ 2,600,000 $ 6,600,000 Cost of goods sold (2,600,000 ) (2,100,000 ) (4,700,000 ) Gross profit $ 1,400,000 $ 500,000 $ 1,900,000 Research and development (1,170,000 ) Selling expenses (130,000 ) Profit before taxes $ 600,000 Seventy-five percent of the research and development and selling expenses were traceable to Askin. Profit before taxes for the Bskin product, per life-cycle income statements, is: Answer could be: $425,000. $332,500. $522,500. $207,500. $175,000

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