Suppose that you have been given a summer job as an intern at Electronic Waves, a company that manufactures portable two-way radio transceivers for radio enthusiasts. The privately owned company 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 were given the following list of costs.
Classify the following lists of costs as either product (inventoriable) costs or period (non-inventoriable) costs for purposes of preparing the financial statements for the bank.
Depreciation on salespersons’ cars.
Salaries of personnel who work in the finished goods warehouse.
Rent on equipment used in the factory.
Lubricants used for machine maintenance.
Soap and paper towels used by factory workers at the end of a shift.
Factory supervisors’ salaries.
Heat, water, and power consumed in the factory.
Materials used for boxing company products for shipment overseas. (Units are not normally boxed.)
Workers’ Compensation Insurance for factory employees.
Depreciation on chairs and tables in the factory lunchroom.
The cost of packaging the company’s product.
The wages of the receptionist in the administrative offices.
Cost of leasing the corporate jet used by the company’s executives.
The cost of renting rooms at a British Columbia resort for the annual sales conference.
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