Consider the following cost items:

1. Salaries of players on the Boston Red Sox.

2. Year-end completed goods of Levi Strauss jeans.

3. Executive compensation costs at Home Depot.

4. Advertising costs for Sony.

5. Costs incurred during the period to insure a Ford plant against fire and flood losses.

6. Current year’s depreciation on a Carnival Cruise Line ship.

7. The cost of chemicals and paper used during the period by Kodak.

8. Assembly-line wage cost incurred at a Kona bicycle plant.

9. Year-end production in process at Gateway Computer.

10. The cost of products sold to customers of a Target store.

11. The cost of products sold to distributors of a carpet manufacturer, such as Shaw or Dalton.

Required:

1. Evaluate the costs just cited, and determine whether the associated dollar amounts would be found on the firm’s balance sheet, income statement or schedule of cost-of-goods-manufactured.

2. What major asset will normally be insignificant for service enterprises and relatively substantial for retailers, wholesalers, and manufacturers? Briefly discuss.

3. Briefly explain the major differences between income statements of service enterprises versus those of retailers, wholesalers, and manufacturers.

4. Picture the operations of a firm such as Dell Inc. one that is involved in direct sales and mass customization of products. What would be the major difference in the balance sheet of this type of organization versus the balance sheet of a company that engages in more traditional manufacturing activities, that is, producing goods and waiting for customer orders to arrive?