Q. Each of the following cost items pertains to one of these companies: General Electric (a manufacturing-sector company), Safeway (a merchandising-sector company), and Google (a service-sector company): a. Perrier mineral water purchased by Safeway for sale to its customers b. Electricity used to provide lighting for assembly-line workers at a General Electric refrigerator assembly plant c. Depreciation on Google’s computer equipment used to update directories of Web sites d. Electricity used to provide lighting for Safeway’s store aisles e. Depreciation on General Electric’s computer equipment used for quality testing of refrigerator components during the assembly process f. Salaries of Safeway’s 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: a). Distinguish between manufacturing-, merchandising-, and service-sector companies. b). Distinguish between inventoriable costs and period costs. c). Classify each of the cost items (a–h) as an inventoriable cost or a period cost. Explain your answers.
Q. Each of the following cost items pertains to one of these companies: General Electric (a manufacturing-sector company), Safeway (a merchandising-sector company), and Google (a service-sector company):
a. Perrier mineral water purchased by Safeway for sale to its customers
b. Electricity used to provide lighting for assembly-line workers at a General Electric refrigerator
assembly plant
c.
d. Electricity used to provide lighting for Safeway’s store aisles
e. Depreciation on General Electric’s computer equipment used for quality testing of
refrigerator components during the assembly process
f. Salaries of Safeway’s 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:
a). Distinguish between manufacturing-, merchandising-, and service-sector companies.
b). Distinguish between inventoriable costs and period costs.
c). Classify each of the cost items (a–h) as an inventoriable cost or a period cost.
Explain your answers.
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