Louisiana State University, Shreveport ACCOUNTING ACCOUNTING 206 During 2014, Welch Manufacturing Company incurred $67,000,000 of…
During 2014, Welch Manufacturing Company incurred $67,000,000 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 2014. Manufacturing costs (direct materials, direct labor, and overhead) are expected to be $250 per unit. Packaging, shipping, and sales commissions are expected to be $50 per unit. Welch expects to sell 2,000,000 batteries before new research renders the battery design technologically obsolete. During 2014, Welch made 440,000 batteries and sold 400,000 of them.
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