Identifying product versus general, selling, and administrative costs
A review of the accounting records of Rayford Manufacturing indicated that the company incurred the following payroll costs during the month of August.
1.Salary of the company president—$32,000.
2.Salary of the vice president of manufacturing—$16,000.
3.Salary of the chief financial officer—$18,800.
4.Salary of the vice president of marketing—$15,600.
5.Salaries of middle managers (department heads, production supervisors) in manufacturing plant—$196,000.
6.Wages of production workers—$938,000.
7.Salaries of administrative secretaries—$112,000.
8.Salaries of engineers and other personnel responsible for maintaining production equipment— $178,000.
9.Commissions paid to sales staff—$252,000
. Required
a.What amount of payroll cost would be classified as general, selling, and administrative expense?
b.Assuming that Rayford made 4,000 units of product and sold 3,600 of them during the month of August, determine the amount of payroll cost that would be included in cost of goods sold.
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