Power-To-Spare, Inc. makes a smartphone case that includes a battery that extend

Question

Power-To-Spare, Inc. makes a smartphone case that includes a battery that extends the operating life of an iPhone. The manufacturing costs per unit include $15 direct materials, $17 direct labor, and $8 manufacturing overhead. These costs are based on a production and sales volume of 4,000 units. Advertising costs amounted to $25,000. Research and development cost for the materials used in the phone cases amounted $30,000. Companywide administrative costs amounted to $45,000. Fashion design costs amounted to $20,000. Power-To-Spare's management team established the sales price at 150 percent of GAAP-defined product cost. Required a. Determine the total amount of upstream costs. b. Determine the total amount of downstream cost. c. Determine the total amount of midstream cost. d. Determine the sales price per unit. e. Prepare a GAAP-based income statement. Complete this question by entering your answer in the tabs below Req A to D Req Determine the total amount of Upstream, Downstream, Midstream, and Sales price per unit cost. a. Upstream cost b.wnstream cost Do c. Midstream cost d. Sales price per unit .

Explanation / Answer

Part - A

Upstream cost = Production Manufaturing cost+Research & Development cost

=Direct Material+Direct Labour+Manufactruing overhead

=15+17+8

=40 per unit

Total cost = 4000unit *40+30000(Research & Development cost)

=190,000

Downstream Cost

Total cost = Administrative cost + Fashion desing cost

=45000+20000

=65,000

Part -C

Midstream cost

Midstream cost = Advertising cost

=25,000

Part - D

Selling price per unit

Product cost = D.Material +D.Labout +Production Overhead

=15+17+8

=40

Selling price = 40*150%

=60 Per unit

Part -E

Income Statemetn

Particulars Amount in $ Revenue (4000*60) 240,000 Less:Cost of Production 160,000 Gross Profit 80,000 Less:Selling general and Administration overhead(45000+20000+25000) 90,000 Less:Research & Development cost 30,000 Net Loss 40,000

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