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
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