Based on HBS - Daniel Dobbins Distillery, Inc.

In Exhibit 2, is the accounting treatment of Other costs charged to Cost of Goods Sold appropriate? Justify your answer.

Based on the description of the manufacturing process, some costs may or may not be included in the cost of goods sold. Identify these controversial costs and present two brief arguments as follows: 1) Why they should be included in cost of goods, and 2) why they should not be included.

Calculate the net profit for 1988 based on what you think should be included in the cost of goods sold. Explain any difference from the current presentation of net profit.

Is the current method of accounting used by Dobbins better for internal reporting purposes or external reporting purposes? Justify your answer.