I'm starting this forum to understand how other manufacturing businesses treat their product qualification costs.
For example, a product is engineered and developed to entice a customer to purchase the product. That R&D is period expensed.
Customer sees the product and wants 200 units to a certain spec. To move the product from engineering to manufacturing will require some one-time initial setup along with qualification costs (to ensure the manufacturing process and product are up to spec).
Is it appropriate to capitalize these qualification costs into inventory (spread over the units that will be built) vs. period expensing?
For example, a product is engineered and developed to entice a customer to purchase the product. That R&D is period expensed.
Customer sees the product and wants 200 units to a certain spec. To move the product from engineering to manufacturing will require some one-time initial setup along with qualification costs (to ensure the manufacturing process and product are up to spec).
Is it appropriate to capitalize these qualification costs into inventory (spread over the units that will be built) vs. period expensing?