Question

A review of the accounting records of Vernon Manufacturing indicated that the company incurred the following payroll costs during the month of March. Assume the company's financial statements are prepared in accordance with GAAP. 1. Salary of the company president-$32,800. 2. Salary of the vice president of manufacturing—$15,000. 3. Salary of the chief financial officer—$19,500. 4. Salary of the vice president of marketing—$15,400. 5. Salaries of middle managers (department heads, production supervisors) in manufacturing plant-$200,000. 6. Wages of production workers—$936,000. 7. Salaries of administrative secretaries—$105,000. 8. Salaries of engineers and other personnel responsible for maintaining production equipment-$174,000. 9. Commissions paid to sales staff—$246,000. Required a. What amount of payroll cost would be classified as SG&A expense? b. Assuming that Vernon made 3,900 units of product and sold 2,730 of them during the month of March, determine the amount of payroll cost that would be included in cost of goods sold. (Do not round intermediate calculations.) a. Payroll cost to be included in SG&A cost b. Payroll cost to be included in cost of goods sold

Answer 1

a
Salary of the company president	32800
Salary of the chief financial officer	19500
Salary of the vice president of marketing	15400
Salaries of administrative secretaries	105000
Commissions paid to sales staff	246000
Payroll cost to be included in SG&A cost	418700
b
Salary of the vice president of manufacturing	15000
Salaries of middle managers	200000
Wages of production workers	936000
Salaries of engineers and other personnel	174000
Total product cost	1325000
Payroll cost to be included in cost of goods sold	927500	=1325000/3900*2730