Response to the following problem:
Qualcomm Incorporated is a leading developer and manufacturer of digital wireless telecommunications products and services. Qualcomm reported the following inventories on September 30, 2004, in the notes to its financial statements:
(In millions)
September 30, 2004
Raw materials $ 20
Work-in-process 3
Finished goods 131
$154
a. Why does Qualcomm report three different inventories?
b. What costs are included in each of the three classes of inventory?