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Use the following information to calculate the sales price of a boat under both GAAP...

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Accounting

Use the following information to calculate the sales price of a boat under both GAAP and for internal decision purposes:

Number of boats to be sold 500
Upstream costs $ 5,000,000
Direct materials per boat $ 50,000
Direct labor per boat $ 30,000
Overhead per boat $ 20,000
Downstream costs $ 2,000,000

(1). Assume the company wants to sell each boat for 20% more than the cost to produce the boat. Which of the following would be the sales price under GAAP and for internal decision purposes?

GAAP Internal Decision
a) $ 120,000 $ 136,800
b) $ 136,800 $ 136,800
c) $ 120,000 $ 114,000
d) $ 136,800 $ 114,000

(2) Use the above information to determine net income in the financial statements under GAAP:

Assume the company wants to sell each boat for 20% more than the cost to produce the boat.

Multiple Choice

a. $10,000,000

b. $3,000,000

c. $7,000,000

d. $5,000,000

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