During 2014, Welch Manufacturing Company incurred $51,600,000 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 $267 per unit. Packaging, shipping, and sales commissions are expected to be $56 per unit. Welch expects to sell 1,200,000 batteries before new research renders the battery design technologically obsolete. During 2014, Welch made 442,000 batteries and sold 399,000 of them.
Determine the amount of cost of goods sold and the ending inventory balance for the year 2014