Exercise $1-10$A $($Algo$)$ Identifying upstream and downstream costs LO $1-4$

During year $1,$ Zachary Manufacturing Company incurred $$74,800,000$ of research and development $($R&D$)$ costs to create a long$-$life battery to use in computers. In accordance with FASB standards, the entire R&D cost was recognized as an expense in year $1.$ Manufacturing costs $($direct materials, direct labor, and overhead$)$ are expected to be $$60$ per unit. Packaging, shipping, and sales commissions are expected to be $$14$ per unit. Zachary expecis to sell $1,700,000$ batteries before new research renders the battery design technologically obsolete. During year $1,$ Zachary made $446,000$ batteries and sold $395,000$ of them.

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 Zachary desires to earn a profit margin that is equal to $25$ 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 $B$

Required $C$

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.

$\backslash$table$[[$Cost of goods sold$],[$Ending inventory$]]$