A company in the business of producing large special-purpose computers has in- troduced a new model...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
A company in the business of producing large special-purpose computers has in- troduced a new model of an existing product. The new machine represents a significant technological advancement, and substantial learning curve costs are expected. Based on extensive studies, the company has determined that it is reasonable to forecast a market of at least 200 units for the new computer. Accordingly, the company has calculated its estimated average cost of sales per machine of $100,000, as follows: Initial tooling and other production costs..... Estimated production costs (200 units X $90,000). Total estimated production costs..... ... Number of units to be produced and sold..... Average cost per unit ($10,000 initial costs + $90,000 production costs)...... $ 2,000,000 18,000,000 $20,000,000 200 $100,000 At the balance sheet date, the company has received firm orders for 150 computers. As of this same date, the company has delivered and installed 45 computers; 35 additional units are in production and are estimated to represent 15 equivalent completed units. Total costs incurred at the balance sheet date, including initial tooling and other production costs amounted to $9,350,000. Required: The amount to be reported as production "learning curve" and other program costs deferred. A company in the business of producing large special-purpose computers has in- troduced a new model of an existing product. The new machine represents a significant technological advancement, and substantial learning curve costs are expected. Based on extensive studies, the company has determined that it is reasonable to forecast a market of at least 200 units for the new computer. Accordingly, the company has calculated its estimated average cost of sales per machine of $100,000, as follows: Initial tooling and other production costs..... Estimated production costs (200 units X $90,000). Total estimated production costs..... ... Number of units to be produced and sold..... Average cost per unit ($10,000 initial costs + $90,000 production costs)...... $ 2,000,000 18,000,000 $20,000,000 200 $100,000 At the balance sheet date, the company has received firm orders for 150 computers. As of this same date, the company has delivered and installed 45 computers; 35 additional units are in production and are estimated to represent 15 equivalent completed units. Total costs incurred at the balance sheet date, including initial tooling and other production costs amounted to $9,350,000. Required: The amount to be reported as production "learning curve" and other program costs deferred.
Expert Answer:
Answer rating: 100% (QA)
To calculate the amount to be reported as production learning curve and other program costs deferred ... View the full answer
Related Book For
Financial Reporting Financial Statement Analysis and Valuation a strategic perspective
ISBN: 978-1337614689
9th edition
Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Posted Date:
Students also viewed these accounting questions
-
Tesla Motors, Inc. is in the business of developing, manufacturing, and selling technology for high-performance electric automotive and powertrain components. Hoping to develop a greater worldwide...
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
Read the case study "Southwest Airlines," found in Part 2 of your textbook. Review the "Guide to Case Analysis" found on pp. CA1 - CA11 of your textbook. (This guide follows the last case in the...
-
Which of the following questions involve microeconomics, and which involve macroeconomics? In each case, explain your answer. a. Why did consumers switch to smaller cars in 2008? b. Why did overall...
-
Create an appropriate query that lists the first and last names of each employee and the person, if any, that employee reports to. (This is a case where the Employees table includes a primary key,...
-
In a recent census, the number of color televisions per household was recorded a. Develop the probability distribution of X, the number of color televisions per household. b. Determine the following...
-
Teague Corporation has the following long-term investments: 1. 60 percent of the common stock of Ariel Corporation 2. 13 percent of the common stock of Copper, Inc. 3. 50 percent of the nonvoting...
-
Palmona Co. establishes a $ 200 petty cash fund on January 1. On January 8, the fund shows $ 38 in cash along with receipts for the following expenditures: postage, $ 74; transportation-in, $ 29;...
-
Management of Mittel Company would like to reduce the amount of time between when a customer places an order and when the order is shipped. For the first quarter of operations during the current year...
-
Orion Controls is a leading manufacturer of industrial valve systems, and Nathan Armstrong, head of Marketing, had been contacted by Andre Gide, EVP of Avion Chemical to place an order for 50 of...
-
There are four types of corporate social responsibility: the economic, environmental, ethical, and philanthropic dimensions. Select an organization you worked in or an organization that you are...
-
(Corporate income tax) Sales for J. P. Hulett Inc. during the past year amounted to $4.2 million. Gross profits totaled $1.04 million, and operating and depreciation expenses were $504,000 and...
-
What fundamental information did you find useful to research (for a commodity of your choice)? Did you use teachnical analysis? Why or why not
-
How do corporate leaders reconcile the tension between short-term performance imperatives and long-term value creation goals in strategic decision-making processes, particularly amidst the...
-
Discuss the application of advanced hydrological modeling methodologies, such as distributed hydrologic models and stochastic rainfall-runoff simulations, in assessing the potential impacts of land...
-
1. What are the record keeping requirements for a business in Australia? 2. What is an audit and how often can a business be audited by the tax office? 3. What records must a business keep for...
-
Given that f(x) = 3x + 1 and h(x)=x, find (h o f)(2). (hof)(2)= (Simplify your answer.)
-
As economic conditions change, how do banks adjust their asset portfolio?
-
The Apollo Group is one of the largest providers of private education and runs numerous programs and services, including the University of Phoenix. Exhibit 3.23 provides statements of cash flows for...
-
This problem explores the sensitivity of the value-earnings and value-to-book models to changes in underlying assumptions. We recommend that you design a computer spreadsheet to perform the...
-
Massachusetts Stove Company manufactures wood-burning stoves for the heating of homes and businesses. The company has approached you, as chief lending officer for the Massachusetts Regional Bank,...
-
What natural instincts cause some managers to resist detailed comparisons with competitors?
-
How do growth economies differ from scale economies or learning curve effects?
-
What is the significance of strong growth economies among the Fortune 500?
Study smarter with the SolutionInn App