The plant manager favors charging the overtime premiums directly to the jobs worked on during overtime hours and the bonus to administrative expense.
The sales manager states that the overtime premiums and bonus are not factory costs chargeable to regular production but are costs created from administrative policies and, therefore, should be charged only to administrative expense.
Required:
1. Evaluate each position—the controller’s, the plant manager’s, and the sales manager’s. If you disagree with all of the positions taken, present your view of the appropriate allocation.
2. Prepare the journal entries to illustrate the position you support, including the accrual for the bonus.
