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 Canada 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 your salary should be classified as a manufacturing (product) cost, the controller says it should be classified as a selling expense, and the president says it does not matter how your salary cost is classified.

Required:

1. Which viewpoint is correct? Why?

2. From the point of view of the reported net income for the year, is the president correct? Explain.