Question

During the review of the accounting records of Obert Manufacturing Company, you noted that the company incurred the following costs related to payroll during the month of June: Salary of the company president $32,000 Salary of the CFO $18,800 Salary of the VP of marketing $15,600 Salary of the plant manager $16,000 Salaries of the middle managers in the manufacturing plant such as dept. heads, production supervisors $19,600 Wages of production workers $938,000 Salaries of administrative staff $112,000 Salaries of engineers and other personnel responsible for equipment maintenance Commissions paid to sales staff $178,000 $252,000 Requirements: 1. Calculate the amount of payroll cost that would be classified as a period cost (general, selling and administrative expense) and a product cost. 2. Assume that Obert made 4,000 units of product in June and sold 3,600 units. How much payroll cost would be included in the CGS?

Answer 1

Payroll Cost for Selling
1. Comission Paid to Sales Staff	$252,000
Administrative Payroll Cost
1. Salary of the company president	$32,000
2. . Salary of the CFO	$18,800
3. . Salary of the VP of marketing	$15,600
4. . Salaries of administrative staff	$112,000
5. Salary of the vice plant manager	$16,000
Total Period cost	$446,400
1. Salary of Middle manager in manufacturing plant	$19,600
2. Wages of Production Worker	$938,000
3. Salary of Engineer and ither personnel responsible for maintaining production equipment	$178,000
Total Product cost	$1,135,600
Total Cost of Payroll (1135600+16000)	$ 1,151,600
Toal Units	4,000
Cost per Unit	$      287.90
Payroll Cost included in CGS ($287.90 * 3,600)	$ 1,036,440