Assume that you work for the Acme Wire Manufacturing Company. Some employees in the company are unsure of which costs should be included in inventories and which costs should not. There is also some confusion regarding the logic of including some items while excluding others.

You have been assigned to a group that is responsible for making a presentation on which of Acme’s costs would properly be classified as inventory costs and which would not.

Required: Prepare a presentation describing the type of items that would be included in inventories and those that would not. Comment on the logic of including some cost items in inventory while excluding others.