REQUIREMENTS:

1. Distinguish between manufacturing-, merchandising-, and service-sector companies.

2. Distinguish between inventoriable costs and period costs.

3. Classify each of the cost items (a h) as an inventoriable cost or a period cost. Explain your answers.

Each of the following cost items pertains to one of these companies: Star Market (a merchandising- sector company), Maytag (a manufacturing-sector company), and Yahoo! (a service-sector company):

a. Cost of lettuce and tomatoes on sale in Star Markets produce department

b. Electricity used to provide lighting for assembly- line workers at a Maytag refrigerator- assembly plant c. Depreciation on Yahoo! s computer equipment used to update its Web site

d. Electricity used to provide lighting for Star Markets store aisles

e. Depreciation on Maytags computer equipment used for quality testing of refrigerator components during the assembly process

f. Salaries of Star Markets marketing personnel planning local- newspaper advertising campaigns

g. Perrier mineral water purchased by Yahoo! for consumption by its software engineers

h. Salaries of Yahoo!s marketing personnel selling advertising

i. Depreciation on vehicles used to transport Maytag refrigerators to retail stores