Question

A company's distribution and warehouse expenses do not include which one of the following?

a. Per pair freight costs on incoming shipments of newly-produced footwear from one or more of the company's production facilities
b. The inventory costs of carrying unsold pairs over from the prior year ($0.50 per pair on required inventrory and $1 per pair on additional unsold pairs)
c. Any tariffs on pairs imported from the company's foreign production facilities
d. The costs of processing, boxing, packaging, handling, and shipping orders to footwear retailers and the pairs purchased by online buyers
e. the wages, salaries, and bonuses paid to employees at each of the company's distribution centers

Answer 1

Distribution and warehouse expenses include costs like warehouse storage fees, logistics, and employee wages at distribution centers, but do not include tariffs on imported goods which are additional taxes paid at the border.

Step-by-step explanation:

A company's distribution and warehouse expenses are the costs associated with storing and transporting the company's products to customers or retail locations. These expenses typically include costs such as warehouse storage fees, logistics, the wages, salaries, and bonuses paid to employees at the distribution centers, as well as transport and freight charges. However, they do not include the costs associated with tariffs on items imported from the company's foreign production facilities. Tariffs are a form of taxation imposed on imported goods and are paid at the border; they are considered separate from the internal distribution and warehousing operations of a company. Economic strategies such as imposing tariffs or import quotas often arise in anti-dumping cases, where domestic producers seek to protect their industries from foreign competitors by claiming unfair pricing practices.

For example, when an industry complains about unfair dumping, it might lead to government regulators imposing tariffs. However, the added cost of tariffs is reflected in the overall cost of goods sold rather than distribution and warehouse expenses. Understanding the difference between these types of expenses is crucial for accurate financial reporting and making well-informed business decisions.