You have been hired by Vinex to fill a new position to meet the demand of 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 Vietnam so that goods will be
available as orders are received from customers. The company is unsure how to classify
your annual salary in the accounting book. Vinex’s cost analyst says that your salary
should be classified as product cost. Vinex’s controller says that it should be classified as
a selling expense. Vinex’s president says that it doesn’t matter which way your salary
cost is classified.
Required:
1. Which point of view is correct? Give your explanation for this.
2. From the point of view of the reported net operating income for the year, do you agree
with Vinex president’s statement “it doesn’t matter which way your salary cost is
classified”? Give explanation for your agreement or disagreement.