Practical Management Science
Practical Management Science
6th Edition
ISBN: 9781337406659
Author: WINSTON, Wayne L.
Publisher: Cengage,
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2. Beech Company made the following expenditures relating to Product FG.
Legal cost to file a patent on Product FG. Production of the
finished product would not have been undertaken without the
25,000
patent.
Special equipment to be used for development of Product FG. The
equipment has an estimated useful life of four years.
Labor and material costs incurred in producing a prototype model
Cost of testing the prototype
Trouble shooting breakdown during production.
Cost of routine on-going effort to refine, enrich or improve quality
200,000
750,000
78,000
38,000
86,000
of Product FG.
Required:
a) What is the total cost that should recorded as research and development cost?
b) What is the total cost that should be part of Intangible assets?
c) What is the total cost that should be part of operating expense?
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Transcribed Image Text:2. Beech Company made the following expenditures relating to Product FG. Legal cost to file a patent on Product FG. Production of the finished product would not have been undertaken without the 25,000 patent. Special equipment to be used for development of Product FG. The equipment has an estimated useful life of four years. Labor and material costs incurred in producing a prototype model Cost of testing the prototype Trouble shooting breakdown during production. Cost of routine on-going effort to refine, enrich or improve quality 200,000 750,000 78,000 38,000 86,000 of Product FG. Required: a) What is the total cost that should recorded as research and development cost? b) What is the total cost that should be part of Intangible assets? c) What is the total cost that should be part of operating expense?
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