Question:79 During 2011, Gallo Manufacturing Company incurred $90,000,000 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 2011. Manufacturing costs (direct materials, direct labor, and overhead) are expected to be $260 per unit. Packaging, shipping, and sales commissions are expected to be $50 per unit. Gallo expects to sell 2,000,000 batteries before new research renders the battery design technologically obsolete. During 2011, Gallo made 440,000 batteries and sold 400,000 of them. a. Identify the upstream and downstream costs. b. Determine the 2011 amount of cost of goods sold and the ending inventory balance.
Question:79 During 2011, Gallo Manufacturing Company incurred $90,000,000 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 2011. Manufacturing costs (direct materials, direct labor, and overhead) are expected to be $260 per unit. Packaging, shipping, and sales commissions are expected to be $50 per unit. Gallo expects to sell 2,000,000 batteries before new research renders the battery design technologically obsolete. During 2011, Gallo made 440,000 batteries and sold 400,000 of them. a. Identify the upstream and downstream costs. b. Determine the 2011 amount of cost of goods sold and the ending inventory balance.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
help
Transcribed Image Text:Question:79
During 2011, Gallo Manufacturing Company incurred $90,000,000 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 2011. Manufacturing costs
(direct materials, direct labor, and overhead) are expected to be $260
per unit. Packaging, shipping, and sales commissions are expected to
be $50 per unit. Gallo expects to sell 2,000,000 batteries before new
research renders the battery design technologically obsolete. During
2011, Gallo made 440,000 batteries and sold 400,000 of them.
a. Identify the upstream and downstream costs.
b. Determine the 2011 amount of cost of goods sold and the ending
inventory balance.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education