Exercise 1-10A (Algo) Identifying upstream and downstream costs LO 1-4 During year 1, Walton Manufacturing Company incurred $86,100,000 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 $60 per unit. Packaging, shipping, and sales commissions are expected to be $9 per unit Walton expects to sell 2,100,000 batteries before new research renders the battery design technologically obsolete. During year 1, Walton made 447,000 batteries and sold 408,000 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 Walton desires to earn a profit margin that is equal to 20 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 Complete this question by entering your answers in the tabs below. 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 Wolton desires to earn a profit margin that is equal to 20 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 . Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Identify the upstream and downstream costs. 1. Research and development 2 Packaging 3. Shipping 4. Sales commissions Upstream cost Downstream cost Downstream cost Downstream cost Required > Check my work 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 Walton desires to earn a profit margin that is equal to 20 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. Required A Required B Required Required D 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 Cost of goods sold Ending inventory Check my work 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 Walton desires to earn a profit margin that is equal to 20 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 Requiremente. Complete this question by entering your answers in the tabs below. Required A Required B Required Required D Determine the sales price assuming that Walton desires to eam a profit margin that is equal to 20 percent of the total cost of developing, making, and distributing the batteries. (Do not round intermediate calculations. Round your final answer to 2 decimal places. Sales price d. Prepare a GAAP.based income statement for year 1. Use the sales price developed in Requirement Complete this question by entering your answers in the tabs below. Required A Required B Required Required D Prepare a GAAP-based income statement for year 1. Use the sales price developed in Requirement c. (Do not round Intermediate calculations.) WALTON MANUFACTURING COMPANY Income Statement Sales revenue Cost of goods sold Sales commissions Net income (5) $ Required C
