Question

A review of the accounting records of Thornton 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-$32,000. 2. Salary of the vice president of manufacturing—$16,400. 3. Salary of the chief financial officer—$18,500. 4. Salary of the vice president of marketing-$15,300. 5. Salaries of middle managers (department heads, production supervisors) in manufacturing plant-$191,000. 6. Wages of production workers—$930,000. 7. Salaries of administrative secretaries—$110,000. 8. Salaries of engineers and other personnel responsible for maintaining production equipment-$186,000. 9. Commissions paid to sales staff-$242,000. Required a. What amount of payroll cost would be classified as SG&A expense? b. Assuming that Thornton made 4,800 units of product and sold 3,360 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

Thornton Manufacturing

Ans a Payroll classified asselling,general &overhead
Salary Of Company President	$                      32,000
Salary of Chief Financial officer	$                      18,500
Salary of Vice Precident Marketing	$                      15,300
Salaries of administrative Secretaries	$                   110,000
Commissions paid to sales staff	$                   242,000
Total	$                   417,800
Salary which can be included in COGS
Salary of Vice PrecidentManufacturing (manufacturing overhead)	$                      16,400
Salaries of Middle manger atmanufacturing plant (manufacturing overhead)	$                   191,000
Wages of Production Workers (Direct Labour)	$                   930,000
Salaries of engineer and other personnel maintaining production equipment (manufacturing overhead)	$                   186,000
Total	$                1,323,400
No. of units produced	$                        4,800
Cost per unit	$                      275.71
3360 units are sold so COGS will include	$                   926,380

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