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During year 2, Vernon Manufacturing Company incurred $120400000 of research and development costs to create a long life battery to use in computers. In accordance
During year 2, Vernon Manufacturing Company incurred $120400000 of research and development 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 are expected to be $54 per unit. Packaging, shipping, and sales commisions are expected to be $17 per unit. Vernon expects to sell 2,800,000 batteries before new research renders the battery design technologically obsolete. During year 2, Vernon made 441.000 batteries and sold 401,000 of them.
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