Each of the following cost items pertains to one of thesecompanies: General Electric(a manufacturing-sector company), Safeway (a merchandising-sector company),and Google (a service-sector company):Perrier mineral water purchased by Safeway for sale to its customersElectricity used to provide lighting for assembly-line workers at a General Electricrefrigerator assembly plantDepreciation on Google’s computer equipment used to update directories of WebsitesElectricity used to provide lighting for Safeway’s store aislesDepreciation on General Electric’s computer equipment used for quality testing ofrefrigerator components during the assembly processSalaries of Safeway’s marketing personnel planning local-newspaper advertisingcampaignsPerrier mineral water purchased by Google for consumption by its softwareengineersSalaries of Google’s marketing personnel selling banner advertisingRequired:Distinguish between manufacturing-, merchandising-, and service-sectorcompanies.Distinguish between inventoriable costs and period costs.Classify each of the cost items (a–h) as an inventoriable cost or a period cost.

Answered: Each of the following cost items…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Each of the following cost items pertains to one of thesecompanies: General Electric

(a manufacturing-sector company), Safeway (a merchandising-sector company),

and Google (a service-sector company):

Perrier mineral water purchased by Safeway for sale to its customers
Electricity used to provide lighting for assembly-line workers at a General Electric

refrigerator assembly plant

Depreciation on Google’s computer equipment used to update directories of Web

sites

Electricity used to provide lighting for Safeway’s store aisles
Depreciation on General Electric’s computer equipment used for quality testing of

refrigerator components during the assembly process

Salaries of Safeway’s marketing personnel planning local-newspaper advertising

campaigns

Perrier mineral water purchased by Google for consumption by its software

engineers

Salaries of Google’s marketing personnel selling banner advertising

Required:

Distinguish between manufacturing-, merchandising-, and service-sector

companies.

Distinguish between inventoriable costs and period costs.
Classify each of the cost items (a–h) as an inventoriable cost or a period cost.

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