Indicate whether each of the following is a start-up cost (S), an ongoing operating cost (O),...

Indicate whether each of the following is a start-up cost (S), an ongoing operating cost (O), or both (B). Remember that start-up costs include the initial period of operations as well.

	Type of expense
a. $1,000 for first month's rent
b. $25,000 for store fixtures
c. $1,000 for third month’s rent
d. Weekly cleaning fee of $250
e. Purchase of $50,000 inventory
f. Payroll expense
g. $50,000 for T.V. advertising

Expert Solution

Startup costs include those expenses which incurred during the process of starting a new business or at the initial period of operation..

An ongoing operating cost include day to day expenses which incurred during running of a business.

a. $1,000 for first month's rent -- start-up cost and an ongoing operating cost because this is necessary to pay to start a new business.

b. $25,000 for store fixtures -- start-up cost because fixture and fitting is done at the initial period of operation.

c. $1,000 for third month’s rent-- an ongoing operating cost because this needs to be paid each and every month.

d. Weekly cleaning fee of $250-- an ongoing operating cost because this needs to be paid each and every month.

e. Purchase of $50,000 inventory-- start-up cost and an ongoing operating cost because this may be purchased at the initial period of operation or anytime during the period of business.

f. Payroll expense-- ongoing operating cost because this needs to be paid each and every month.

g. $50,000 for T.V. advertising-- start-up cost and an ongoing operating cost because every start up business advertise their product to promote and it is done time to time as per the requirement of the business to gain more profits or attracting the customers.

ekkarill92 answered 2 years ago

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