In a responsibility accounting system, the only costs that a manager should be evaluated on are those costs that the manager can control. The answer to this question must include only costs that are (1) product costs and (2) costs that the warehouse supervisor can control. The warehouse supervisor can control the receiving clerks' wages and the shipping clerks' wages. However, this problem asks for the total labor-related costs that would be listed on the responsibility accounting performance report as product costs. Product costs include all the costs that are involved in acquiring or making a product. These costs are also called inventoriable costs. For a manufacturer, product costs include direct materials, direct labor, and manufacturing overhead. Receiving costs are product costs because they are necessary for manufacturing the product. Labor costs for receiving are classified as indirect labor, and so they are considered manufacturing overhead and are a product cost. Although receiving costs are product costs, shipping costs are selling costs, and so they are classified as period costs, not product costs. Therefore, even though the warehouse supervisor controls the shipping clerks' wages, those wages are period costs, not product costs, so they must be excluded. The supervisor's salary is a product cost because it is indirect labor. However, the supervisor cannot control his or her own salary (it is controlled by someone higher up in the organization) and so it is not included as a product cost under the control of the warehouse supervisor. Thus, the only labor-related costs listed that are (1) product costs and (2) costs that the warehouse supervisor can control are the costs for the receiving clerks. Those will include $75,000 for the receiving clerks' wages plus 30% of the receiving clerks' wages for benefits, which is $22,500 ($75,000 × .30), for a total of $97,500.
This answer results from including the receiving clerks' wages and related benefits, plus 60% of the supervisor's salary and related benefits. This incorrectly assumes that the supervisor's salary is controllable by the supervisor. The answer to this question should be the total product costs that the warehouse supervisor can control; and the warehouse supervisor is not able to control his/her own salary.
This answer is a total of the receiving clerks' wages and the shipping clerks' wages, plus their related benefits. The answer to this question should be the total product costs that the warehouse supervisor can control.
This answer is a total of the receiving clerks' wages and the shipping clerks' wages. The answer to this question should be the total product costs that the warehouse supervisor can control.
|
The company employs a responsibility accounting system for performance reporting purposes. The costs are classified on the report as period or product costs. The total labor-related costs that would be listed on the responsibility accounting performance report as product costs under the control of the warehouse supervisor for the warehousing function would be