Question

Mr. Brown has just been hired by Opex Company to fill a new position that was created in
response to rapid growth in sales. It is Mr. Brown’s 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 his annual salary in its cost records. The company’s cost
analyst says that his salary should be classified as a manufacturing (product) cost; the controller
says that it should be classified as a selling expense; and the president says that it doesn’t
matter which way Mr. Brown’s salary cost is classified.
a) Which viewpoint is correct? Why?
b) 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 Mr. Brown’s salary
cost is classified? Explain.

Answer 1

Answer:

Articles of association form a document that specifies the regulations for a company's operations and defines the company's purpose. The document lays out how tasks are to be accomplished within the organization, including the process for appointing directors and the handling of financial records.