During year $1,$ Fanning Manufacturing Company incurred $$124,700,000$ of research and development $($R&D$)$ costs to create a long$-$life battery to use in computers. In accordance with FASB standards, the entire R&D cost was recognized as an expense in year $1.$ Manufacturing costs $($direct materials, direct labor, and overhead$)$ are expected to be $$48$ per unit. Packaging, shipping, and sales commissions are expected to be $$13$ per unit. Fanning expects to sell $2,900,000$ batteries before new research renders the battery design technologically obsolete. During year $1,$ Fanning made $435,000$ batteries and sold $407,000$ of them.

Required

a$.$ Identify the upstream and downstream costs.

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.

c$.$ Determine the sales price assuming that Fanning 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$.$

Complete this question by entering your answers in the tabs below.

$\backslash$table$[[$Required $A,$Required $B,$Required $C$ Required $D$