What cost is assigned to this artistic piece

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Problem 1: A distributor of artistic iron-based fixtures acquires a piece for $1,000, terms FOB shipping point. Additional costs in obtaining it and offering it for sale include $150 for transportation-in, $300 for import duties, $100 for insurance during shipment, $200 for advertising, a $50 voluntary gratuity to the delivery person, $75 for enhanced store lighting, and $250 for sales staff salaries. For computing inventory, what cost is assigned to this artistic piece?

Problem 2: The solution for this question is $1,550. It is tabulated as $1,000 + $150 (Transportation-in) +$300 (Import duties) + $100 (Insurance). Why is it then that $200 (for advertising) and $250 (for sales staff salaries) are not included as inventory costs? Aren't inventory costs and staff's work duty to ensure the merchandise becomes saleable?

Problem 3: Determine then what components should be included in accounting for inventory cost?

Reference no: EM133004401

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