Able Limited is a company that is involved in the wholesaling and retailing of automobile tires for foreign cars. Most of the inventory is imported, and it is valued on the company's records at the actual inventory cost plus freight-in.
(a) At year end, the warehousing costs are pro-rated over cost of goods sold and ending inventory. Are warehousing costs considered a product cost or a period cost?
(b) A certain portion of Able Limited's inventory consists of obsolete items. Should obsolete items that are not currently consumed in the production of goods or services to be available for sale be classified as part of inventory?