Use the following information to calculate the sales price of a boat under both GAAP...
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Accounting
Use the following information to calculate the sales price of a boat under both GAAP and for internal decision purposes:
Number of boats to be sold
500
Upstream costs
$
5,000,000
Direct materials per boat
$
50,000
Direct labor per boat
$
30,000
Overhead per boat
$
20,000
Downstream costs
$
2,000,000
(1). Assume the company wants to sell each boat for 20% more than the cost to produce the boat. Which of the following would be the sales price under GAAP and for internal decision purposes?
GAAP
Internal Decision
a)
$
120,000
$
136,800
b)
$
136,800
$
136,800
c)
$
120,000
$
114,000
d)
$
136,800
$
114,000
(2) Use the above information to determine net income in the financial statements under GAAP:
Assume the company wants to sell each boat for 20% more than the cost to produce the boat.
Multiple Choice
a. $10,000,000
b. $3,000,000
c. $7,000,000
d. $5,000,000
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