50.1K

Verified Solution

Link Copied!

During Year 2, Baird Manufacturing Company incurred $92,000,000 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 $78 per unit Packaging, shipping, and sales commissions are expected to be $12 per unit. Baird expects to sell 2,000,000 batteries before new research renders the battery design technologically obsolete. During Year 2, Baird made 445,000 batteries and sold 400,000 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 Baird 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 2. Use the sales price developed in Requirement Prepare a GAAP-based income statement for Year 2. Use the sales price developed in Requirement C. (Do not round intermediate calculations.) BAIRD MANUFACTURING COMPANY Income Statement + Net income (loss)

Answer & Explanation Solved by verified expert

See Answer