The Gray Company has a staff of 5 clerks in its general accounting department. 3 who work during the day perform sundry accounting tasks, the other 2 clerks who work in the evening are responsible for
(1) collecting the cost data for the various jobs in process,
(2) verifying manufacturing materials and labor reports
(3) supplying production reports to the supervisors by the nextmorning.
The salaries of these 2 clerks who work at night should be classified as what type of cost?
Managerial accountants are responsible for analyzing and managing financial trends that may impact the business. These responsibilities include tracking and managing operational costs, holding costs, and labor costs. Managerial accountants are also responsible for preparing monthly financial statements and examining the veracity of them.
Answer and Explanation:
In this scenario, The Gray Company has five accounting clerks. Three of the accounting clerks work during the day to complete basic accounting tasks. These range from entering charges, entering payments, and following up on unpaid accounts. However, two of the accountants perform different duties. These include collecting the cost data for the various jobs that are in process, verifying manufacturing materials and labor reports, and supplying production reports to the supervisors by the next morning. These functions are often referred to as managerial accounting functions.
The three clerks that perform basic accounting duties will have their salaries classified as accounting costs. The job duties strictly benefit the accounting department. However, the two clerks that perform managerial accounting duties will have their salaries classified as administrative costs. Managerial accounting duties provide direction for each department in the organization. Departmental budgets cannot be prepared without the information that is gathered and reported through managerial accounting. Administrative overhead is usually distributed evenly across each organizational department.
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Learn more about this topic:
from Business Management: Help & ReviewChapter 9 / Lesson 1