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Exercise-12A Upstream and downstream costs LO 1-2 During 2014, Welch Manufacturing Company incurred $112,800,000 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 2014. Manufacturing costs (direct materials, direct labor, and overhead) are expected to be $264 per unit. Packaging, shipping, and sales commissions are expected to be $57 per unit. Welch expects to sell 2,400,000 batteries before new research renders the battery design technologically obsolete. During 2014, Welch made 435,000 batteries and sold 392,000 of them. Required: a. Identify the upstream and downstream costs Answer is complete and correct 1. Research and development Upstream cost 2. Packaging Downstream cost 3. Shipping Downstream cost 4. Sales commissions Downstream cost b. Determine the amount of cost of goods sold and the ending inventory balance for the year 2014 Answer is complete and correct Cost of goods sold 103,488,000 Ending inventory 11,352,000 c. Determine the sales price assuming that Welch desires to earn a profit margin that is equal to 25 percent of the total cost of developing, making, and distributing the batteries. (Round your answer to 2 decimal places.) Exercise-12A Upstream and downstream costs LO 1-2 During 2014, Welch Manufacturing Company incurred $112,800,000 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 2014. Manufacturing costs (direct materials, direct labor, and overhead) are expected to be $264 per unit. Packaging, shipping, and sales commissions are expected to be $57 per unit. Welch expects to sell 2,400,000 batteries before new research renders the battery design technologically obsolete. During 2014, Welch made 435,000 batteries and sold 392,000 of them. Required: a. Identify the upstream and downstream costs Answer is complete and correct 1. Research and development Upstream cost 2. Packaging Downstream cost 3. Shipping Downstream cost 4. Sales commissions Downstream cost b. Determine the amount of cost of goods sold and the ending inventory balance for the year 2014 Answer is complete and correct Cost of goods sold 103,488,000 Ending inventory 11,352,000 c. Determine the sales price assuming that Welch desires to earn a profit margin that is equal to 25 percent of the total cost of developing, making, and distributing the batteries. (Round your answer to 2 decimal places.)