(b) Al Khoud Company is producing Motorcycle parts and is currently in the process of evaluating a specific partnamed Khoud-11 which cost information is given below.Development costsSelling Price (Local)Ratio of Sales between Muscat & DubaiOMR24,000OMR511:23 yearsMuscat & DubaiProduction PeriodMarketsRatio of Sales to Production1:1Monthly Production CycleParts produced per cycleIndirect manufacturing costs per cycleSetup costs per cycleDirect production costs per cycleOMR26,000 | Delivery charges per cycleOMR12,800OMR38,000OMR16,500117,000 unitsAssuming that the selling price for Khoud-11 in Muscat is 50% of that in Dubai, calculate both, theestimated life-cycle revenues for the full production period and the life-cycle operatingincome for the first year only.

(b) Total production = Number of parts produced during the production period. =Number of parts…

Answered: estimated life-cycle revenues for the…

estimated life-cycle revenues for the full production period and the life-cycle operating income for the first year only.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

(b) Al Khoud Company is producing Motorcycle parts and is currently in the process of evaluating a specific part
named Khoud-11 which cost information is given below.
Development costs
Selling Price (Local)
Ratio of Sales between Muscat & Dubai
OMR24,000
OMR51
1:2
3 years
Muscat & Dubai
Production Period
Markets
Ratio of Sales to Production
1:1
Monthly Production Cycle
Parts produced per cycle
Indirect manufacturing costs per cycle
Setup costs per cycle
Direct production costs per cycle
OMR26,000 | Delivery charges per cycle
OMR12,800
OMR38,000
OMR16,500
1
17,000 units
Assuming that the selling price for Khoud-11 in Muscat is 50% of that in Dubai, calculate both, the
estimated life-cycle revenues for the full production period and the life-cycle operating
income for the first year only.

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