Answer:
1.
Research and Development Cost Upstream
Packing Downstream
Shipping Downstream
Sales Commission Downstream
Research and Development Cost = $8,000,000
Manufacturing Cost (440,000 × $45) = $19,800,000
Packing, Shipping and Sales Commission (400,000 ×$8) = $3,200,000
2.
Cost of Goods Sold $18,000,000
Ending Inventory $1,800,000
Explanation;
Cost of Goods Sold : 400,000 × $45 = 18,000,000 Ending Inventory : (440,000 -400,000) × $45 = 1,800,000
C. Sales Price = $71.25
Explanation;
Upstream Cost Per Unit (8,000,000 ÷ 2,000,000) $4
Manufacturing Cost Per Unit $45
Downstream Cost Per Unit $8
Total Cost $57
(+)Profit Margin 25 % ( $57×25%) $14.25
Sales Price $71.25
d. Rooney Manufacturing Company Income Statement
Sales Revenue (400,000×$71.25) $28,500,000
Cost of Goods Sold $(18,000,000)
Gross Margin $10,500,000
Research and Development $(8,000,000)
Selling Expenses (400,000 ×$8) $(3,200,000)
Net Income (Loss) $(700,000)