Suppose that you have a summer job at Remotely Speaking, a company that manufactures sophisticated portable two-way radio transceivers for remote-controlled military reconnaissance missions. The company, which is privately owned, has approached a bank for a loan to help finance its tremendous growth. The bank requires financial statements before approving such a loan. You have been asked to help prepare the financial statements and are given the following list of costs:
1. Depreciation on salespeople’s cars.
2. Rent on equipment used in the factory.
3. Lubricants used for machine maintenance.
4. Salaries of personnel who work in the finished goods warehouse.
5. Soap and paper towels used by factory workers at the end of a shift.
6. Factory supervisors’ salaries.
7. Heat, water, and power consumed in the factory.
8. Materials used for boxing company products for shipment overseas. (Units are not normally boxed.)
9. Advertising costs.
10. Workers’ Compensation Insurance for factory employees.
11. Depreciation on chairs and tables in the factory lunchroom.
12. The wages of the receptionist in the administrative offices.
13. Cost of leasing the corporate jet used by the company’s executives.
14. The cost of renting rooms at a British Columbia resort for the annual sales conference.
15. The cost of packaging the company’s product.
Required:
Classify the above costs as either product (inventoriable) costs or period (non-inventoriable) costs for preparing the financial statements for the bank.