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During year 1 , Fanning Manufacturing Company incurred $ 1 2 4 , 7 0 0 , 0 0 0 of research and development (
During year Fanning Manufacturing Company incurred $ of research and development R&D costs to create a longlife battery to use in computers. In accordance with FASB standards, the entire R&D cost was recognized as an expense in year Manufacturing costs direct materials, direct labor, and overhead are expected to be $ per unit. Packaging, shipping, and sales commissions are expected to be $ per unit. Fanning expects to sell batteries before new research renders the battery design technologically obsolete. During year Fanning made batteries and sold of them.
Required
a Identify the upstream and downstream costs.
b Determine the year 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.
c Determine the sales price assuming that Fanning desires to earn a profit margin that is equal to percent of the total cost of developing, making, and distributing the batteries.
d Prepare a GAAPbased income statement for year Use the sales price developed in Requirement
Complete this question by entering your answers in the tabs below.
Required A
Required B
Required C
Determine the year 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.
Cost of goods sold
Ending inventory
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