Identifying the Cost of Inventories for a Manufacturer
Operating costs incurred by a manufacturing company become either (1) part of the cost of inventory to be expensed as cost of goods sold at the time the finished goods are sold or (2) expenses at the time they are incurred. Indicate whether each of the following costs belongs in category (1) or (2).
___ a. Wages of factory workers
___ b. Costs of raw materials purchased
___ c. Sales salaries
___ d. Heat, light, and power for the factory building
___ e. Heat, light, and power for the headquarters office building