Question

Target Corporation's footnote from its 2015 annual report table illustrates the primary items classified in each major expense category: cost of sales (COS), or selling, general and administrative (SG&A). For each expense, indicate whether the item would be included in COS or SG&A.

a. advertising expenses

b. compensation and benefits costs for headquarters employees

c. compensation and benefits costs for store employees

d. compensation and benefits costs for distribution center employees

e. distribution center costs

f. freight expenses associated with moving merchandise from our vendors to our distribution centers and our retail stores

g. freight expenses associated with moving merchandise among our distribution and retail stores

h. import costs

i. inventory shrink and theft

j. Litigation and defense costs and related insurance recovery

k. markdowns on slow-moving inventory

l. occupancy and operating costs for headquarters facilities

m. occupancy and operating costs of retail locations

n. outbound shipping and handling expenses associated with sales to our guests

o. payment term cash discounts to our vendors

p. pre-opening costs of stores and other facilities

q. U.S. credit cards servicing expenses

r. vendor reimbursement of specific, incremental, and identifiable advertising costs

Answer 1

Solution - Identification of cost as either cost of sales (COS) or selling, general and administrative expenses (SG&A).

Item Number	Category
a.Advertising expenses	SG&A
b.compensation and benefits costs for headquarters employees	SG&A
c.compensation and benefits costs for store employees	SG&A
d. compensation and benefits costs for distribution center employees	COS
e. Distribution of center cost	COS
f.freight expenses associated with moving merchandise from our vendors to our distribution centers and our retail stores	COS
g.freight expenses associated with moving merchandise among our distribution and retail stores	COS
h.Import costs	COS
i.Inventory shrink and theft	COS
j.Litigation and defense costs and related insurance recovery	SG&A
k.Markdowns on slow moving Inventory	COS
l.occupancy and operating costs for headquarters facilities	SG&A
m.occupancy and operating costs of retail locations	SG&A
n.outbound shipping and handling expenses associated with sales to our guests	COS
o.payment term cash discounts to our vendors	COS
p.pre-opening costs of stores and other facilities	SG&A
q.U.S. credit cards servicing expenses	SG&A
r.vendor reimbursement of specific, incremental, and identifiable advertising costs	SG&A