chapter 10 # 7

Exercise 10-10A (Algo) Identifying upstream and downstream costs LO 10-4 During Year 2, Zachary Manufacturing Company incuired $103,200,000 of research and development (R\&O) costs to create a long life battery to use in computers. In accordance with FASB standards, the entire R\&D cost was recognized as an expense in Year 2 . Manufacturing costs (direct materials, direct labor, and overhead) are expected to be $78 per unit. Packaging, shipping. and sales commissions are expected to be $12 per unit Zachary expects to sell 2,400.000 batteries before new research renders the battery design technologically obsolete. During Yeat 2, Zachary made 449,000 batteries and sold 395,000 of them. Required a. Identify the upstream and downstream costs. b. Determine the Year 2 amount of cost of goods sold and the ending inventory balance that would appear on the financial statements thet are prepered in accordance with GAAP. c. Determine the sales price assuming that Zachary desires to eam o profit margin that is equal to 30 percent of the fotal cost of developing, making, and distributing the botteries. d. Prepare a GAAP-based income statement for Year 2 . Use the sales price developed in Requirement c. Complete this question by entering your answers in the tabs below. Identify the upstream and downstream costs: Exercise 10-10A (Algo) Identifying upstream and downstream costs LO 10-4 Dunng Year 2. Zachary Manutacturing Company incurred $103,200.000 of research and development fesch costs to create a long thy battery to use in computers. In accordance with FASE sasndards, the entire ReD cost was recogrized as an experse in Yeat 2. Manifacturing costs (direct materiaks, direct leber, and overhead) are expected to be 576 per unk. Pockagings thipping. and sales commissions are expected to be $12 per unt, Zochary expects to sell 2,400.000 batteries before new research cenders the battery design technologkilly obsolete. During Year 2, Zachacy made 449,000 batteries and sold 395.000 of them. Aegulired a. Identify the upstream and downstream costs. b. Determine the Year 2 amount of cost of goods sold and the ending imentary bslance that would appear en the financial wasements that ate prepared in atcordance with GAAP. c. Determine the sales price assuming that Zachary desires to earn a proft margin that is equal to 30 percent of the fotar cost of developing. making, and distributing the batteries. d. Prepare a GAAP. based income statemens for Year 2 . Use the sales price developed in Requirement c Complete this auestion by entering your answers in the tabs below. Determine the Yeor 2 amouns cost of goods sold and the ending imventory balance that would appear on the financial statements that are prepared in accordsnce with GMAP. Exercise 10-10A (Algo) Identifying upstream and downstream costs LO 10-4 During Year 2. Zoctiary Manufocturing Compeny incurred $103,200,000 of research and cevelopment (m80) cosss to cresie a long life battery to use in computers, in accordance whth FASB standards, the entre RsD cost was recognixed as an expense in Year 2. commissions are expected to be $12 per unit. Zachary expects to sell 2,400,000 batteries before new research renters the battary design sechnologicaly obsolete. During Year 2, Zachacy made 449000 batteries and sold 395,000 of them. Aequired a. identify the upstream and downstream costs. b. Determine the year 2 amount of cost of goods sold and the ending imventory batance that would appeat on the financial statements thet are prepared in accordance with GAAP. c. Determine the sales price assuming that Zachary desires to eam a proft margin that is equal to 30 percont of the fotal cost of deweloping. making. and distrituting the batteries, d. Prepare a GAAP.based income statement for Year 2 . Use the sales peice developed in Requirement c Complete this question by entering your answers in the tabs below. Determine the sales price assuming that Zachary desires to earn a profit margin that is equal to 30 percent of the fotav cost of developing, making, and distrituting the batteries. (Do not round intermediate calculations. Roound your final arswer to 2 decimal places.) Exercise 10-10A (Algo) Identifying upstream and downstream costs LO 104 Duing Year 2, Zachery Manulacturing Company incueted $103200,000 of teseatch and development (Rs.0) costs to cieate a iseng ati Battery to use ircomputers, in accortance With FASB standards, the errtre HBD cost was recogniced as an expense in Year 2 Mancucturing costs (direct materlals, diect ieboc and overtead) are expected to be $73 per cinit. Packaging, thipeing, and sales commissions are expleted to be $12 per unc Zachary expects to sell 2.400.000 batteries before nack research renders the battary. bevigh sechnologicaly obschote. Duritg Year 2. Zachary made 449000 baeentes and sold 395.000 of them. Required a. I Lentefy the upsteam and downsteam costs: b. Detenine the Year 2 amount of cost of goods sold and the ending inventory balance that would appeer on the financal statements that are prepered in accordance weh Gasp. c. Determine the sales price assuming that Zachacy desires to earn a profit margin that is ecual to 30 percent of the total cont of developing, making, and distibuting the betteries. d. Prepare a Gasp.based income watement for Year 2. Use the sales price deweloped in Recuirement c Complete this question by entering yeur answers in thn tabs below. Prepare a GMPp-based income statement for Year 2. Use the sales price developed in Repulrement c; (Do not round intermpdiate calcilations.)