Question

Exercise 1-6A (Algo) Identifying product versus SG&A costs LO 1-2, 1-3 A review of the accounting records of Adams 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-$32,600. 2. Salary of the vice president of manufacturing-$15,900, 3. Salary of the chief financial officer-$19,600. 4. Salary of the vice president of marketing-$15,600. 5. Salaries of middle managers (department heads, production supervisors) in manufacturing plant-$187,000. 6. Wages of production workers--$934,000. 7. Salaries of administrative secretaries-$107.000 8. Salaries of engineers and other personnel responsible for maintaining production equipment--$188,000. 9. Commissions paid to sales staff-$254,000. Ired a. What amount of payroll cost would be classified as SG&A expense? b. Assuming that Adams made 3,100 units of product and sold 2,635 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.) Answer is complete but not entirely correct. a. Payroll cost to be included in SG&A cost Payroll cost to be included in cost of goods sold $ 428,800 $ 1,128,206 b

Answer 1

a.	Payroll cost to be included in S&G cost	428,800
	($32,600 + 19,600 + 15,600 + 107,000 + 254,000)
b.	Payroll cost to be included in the cost of goods sold	1,126,165
	($15,900 + 187,000 + 934,000 + 188,000) x 2,635/3,100