Consider the two following situations and determine the disposition of the cost of warehousing.

a. The ABC Company purchased a truckload of mink coats. Demand was not as strong as expected and, rather than sell the leftover coats at a large loss, it was decided to store them until the next year.

b. The XYZ Lumber Company had the opportunity to purchase a large quantity of rare wood paneling. It expected to be able to sell this paneling over the next 18 months. The company actually sold it in 12 months.