Polaris reports in notes to its financial statements that, in addition to its products sold, it includes the following costs (among others) in cost of sales: customer shipping and handling expenses, warranty expenses, and depreciation expense on assets used in manufacturing.
Required:
1. Why do you believe Polaris includes these costs in its cost of sales?
2. What effect does this cost accounting policy for its cost of sales have on Polaris financial statements and any analysis of those statements? Explain.