During year $1,$ Baird Manufacturing Company incurred $$48,400,000$ of research and development $($R&D$)$ 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 $1.$

$10$

Manufacturing costs $($direct materials, direct labor, and overhead$)$ are expected to be $$74$ per unit. Packaging, shipping, and sales commissions are expected to be $$17$ per unit. Baird expects to sell $1,100,000$ batteries before new research renders the battery design technologically obsolete. During year $1,$ Baird made $439,000$ batteries and sold $409,000$ of them.

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Hint

a$.$ Identify the upstream and downstream costs.

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b$.$ Determine the year $1$ amount of cost of goods sold and the ending inventory balance that would appear on the financial statements that are prepared in accordance with GAAP.

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c$.$ Determine the sales price assuming that Baird desires to earn a profit margin that is equal to $25$ percent of the total cost of developing, making, and distributing the batteries.

d$.$ Prepare a GAAP$-$based income statement for year $1.$ Use the sales price developed in Requirement $c.$

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Determine the year $1$ amount cost of goods sold and the ending inventory balance that would appear on the final statements that are prepared in accordance with GAAP.

$\backslash$table$[[$Cost of goods sold$],[$Ending inventory$]]$