You have just been hired by Ogden Company to fill a new position that was created in response to rapidgrowth in sales. It is your responsibility to coordinate shipments of finished goods from the factory to distribution warehouses located in various parts of the United States so that goods will be available as ordersare received from customers.The company is unsure how to classify your annual salary in its cost records. The company’s costanalyst says that your salary should be classified as a manufacturing (product) cost; the controller says thatit should be classified as a selling expense; and the president says that it doesn’t matter which way yoursalary cost is classified.Required:1. Which viewpoint is correct? Why?2. From the point of view of the reported net operating income for the year, is the president correct in hisstatement that it doesn’t matter which way your salary cost is classified? Explain.
You have just been hired by Ogden Company to fill a new position that was created in response to rapid
growth in sales. It is your responsibility to coordinate shipments of finished goods from the factory to distribution warehouses located in various parts of the United States so that goods will be available as orders
are received from customers.
The company is unsure how to classify your annual salary in its cost records. The company’s cost
analyst says that your salary should be classified as a
it should be classified as a selling expense; and the president says that it doesn’t matter which way your
salary cost is classified.
Required:
1. Which viewpoint is correct? Why?
2. From the point of view of the reported net operating income for the year, is the president correct in his
statement that it doesn’t matter which way your salary cost is classified? Explain.
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