Question

Each of the following cost items pertains to one of these companies: Whole Foods (a merchandising- sector company), Whirlpool (a manufacturing-sector company), and Google (a service- sector company):
a. Evian mineral water purchased by Whole Foods for sale to its customers
b. Electricity used to provide lighting for assembly- line workers at a Whirlpool refrigerator- assembly plant
c. Depreciation on Google’s computer equipment used to update directories of Web sites
d. Electricity used to provide lighting for Whole Foods’ store aisles
e. Depreciation on Whirlpool’s computer equipment used for quality testing of refrigerator components during the assembly process
f. Salaries of Whole Foods’ marketing personnel planning local- newspaper advertising campaigns
g. Perrier mineral water purchased by Google for consumption by its software engineers
h. Salaries of Google’s marketing personnel selling banner advertising

Required
1. Distinguish between manufacturing-, merchandising-, and service- sector companies. 2. Distinguish between inventoriable costs and period costs.
3. Classify each of the cost items (a– h) as an inventoriable cost or a period cost. Explain your answers.



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  • CreatedJanuary 15, 2015
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