Consider the Following Cost Items

question 75

Essay

Consider the following cost items:
1. Sales commissions earned by a company's sales force.
2. Raw materials purchased during the period.
3. Current year's depreciation on a firm's manufacturing facilities.
4. Year-end completed production of a carpet manufacturer.
5. The cost of products sold to customers of an apparel store.
6. Wages earned by machine operators in a manufacturing plant.
7. Income taxes incurred by an airline.
8. Marketing costs of an electronics manufacturer.
9. Indirect labor costs incurred by a manufacturer of office equipment.
Required:
A. Evaluate the costs just cited and determine whether the associated dollar amounts would appear on the firm's balance sheet, income statement, or schedule of cost of goods manufactured.
B. What major asset will normally be insignificant for service enterprises and relatively substantial for retailers, wholesalers, and manufacturers? Briefly discuss.
C. Briefly explain the similarity and difference between the merchandise inventory of a retailer and the finished-goods inventory of a manufacturer.

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Definitions:

Illegal

Actions or activities that are forbidden by law or statute and subject to criminal or civil penalties.

Exculpatory Clause

A contract provision that releases one party from liability for wrongful acts or negligence.

False Rumour

An untrue statement or tale spread among people, often causing misunderstanding or misinformation.

Insurance Policy

An insurance policy is a contract between an individual or entity and an insurance company, outlining coverage terms and conditions for specific risks.