Glenvar Automotive Specialties, Inc. has a successful market niche. It customizes automobile interiors to fit the various needs of disabled customers. Some customers need special equipment to accommodate drivers with disabilities. Others need modified entrance and seating arrangements for passengers who are disabled. Customer vehicles vary according to different brands and models of sedans, minivans, sport-utility vehicles, and full-size vans. Glenvar's engineers interview customers directly to ascertain their special needs. The engineers then propose a design, explaining it and its cost for the customer's approval. Customers have the opportunity to request changes. Once the company and customer agree on an engineering design and its price, they sign a contract, and the customer's vehicle is delivered to Glenvar's factory. The factory manager directs mechanics to customize the vehicle according to the engineering design.
Required
a. Is Glenvar a manufacturing company or a service company? Explain.
b. Which costing system, job-order or process, would be most appropriate for Glenvar? Why?
c. Does Glenvar have work in process and finished goods inventories?
d. Should Glenvar classify engineering design costs as materials, labor, or overhead? Why?