Exercise 10-10A (Algo) Identifying upstream and downstream costs LO 10-4 During Year 2, Walton Manufacturing Company incurred $65,000,000 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 2 Manufacturing costs (direct materials, direct labor, and overhead) are expected to be $48 per unit. Packaging, snipping, and sales commissions are expected to be $20 per unit. Walton expects to sell 1,300,000 batteries before new research renders the battery design technologically obsolete. During Year 2, Walton made 439,000 batteries and sold 390,000 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 that are prepared in accordance with GAAP c. Determine the sales price assuming that Walton desires to earn a profit margin that is equal to 30 percent of the total cost of developing, making, and distributing the batteries. 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. Required A Required B Required C Required D Identify the upstream and dowristream costs. 1 Research and developmont ces Determine the Year 2 amount of cost of goods sold and the ending inventory balance that would appear on the financ statements that are prepared in accordance with GAAP. Cost of goods sold Ending inventory Complete this question by entering your answers in the tabs below. Required A Required B Required C Required Determine the sales price assuming that Walton desires to earn a profit margin that is equal to 30 percent of the total custo developing, making, and distributing the batteries. (Do not round intermediate calculations. Round your final answer ( 2 decimal places.) Sales price Required B. Required D Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Prepare a GAAP-based income statement for Year 2. Use the sales price developed in Requirement c. (Do m intermediate calculations.) WALTON MANUFACTURING COMPANY Income Statement Net income (loss) Required C of 20 Next