logo image

Chapter 9 Objective 3

Which of the following is a reason for companies to use absorption costing for internal accounting?
It can help prevent managers from taking actions that make their performances measure look good but that hurt the income they report to shareholders
Many companies have switched from absorption costing to variable costing for internal reporting
To reduce the undesirable incentive to build up inventories
Ways to “produce for inventory” that result in increasing operating income include _____.
Deferring maintenance to accelerate production.
Switching production to products that adsorb the highest amount of fixed manufacturing costs is also called
Cherry picking
To discourage producing for inventory, management can
Incorporate a carrying charge for inventory in the internal accounting system
Which of the following steps can a management take to reduce the undesirable effects of absorption costing?
Under absorption costing, if a manager’s bonus is tied to operating income, then increasing inventory levels compared to last year would result in ________.
Under variable costing, if a manager’s bonus is tied to operating income, then increasing inventory levels compared to last year would result in ________.
Not affecting the manager’s bonus
Critics of absorption costing suggest evaluating management on its ability to ________.
Decrease fixed costs
Which of the following inventory costing methods shown below is most likely to cause undesirable incentives for managers to build up finished goods inventory?
Absorption costing

Need essay sample on "Chapter 9 Objective 3"? We will write a custom essay sample specifically for you for only $ 13.90/page

Can’t wait to take that assignment burden offyour shoulders?

Let us know what it is and we will show you how it can be done!
×
Sorry, but copying text is forbidden on this website. If you need this or any other sample, please register

Already on Businessays? Login here

No, thanks. I prefer suffering on my own
Sorry, but copying text is forbidden on this website. If you need this or any other sample register now and get a free access to all papers, carefully proofread and edited by our experts.
Sign in / Sign up
No, thanks. I prefer suffering on my own
Not quite the topic you need?
We would be happy to write it
Join and witness the magic
Service Open At All Times
|
Complete Buyer Protection
|
Plagiarism-Free Writing

Emily from Businessays

Hi there, would you like to get such a paper? How about receiving a customized one? Check it out https://goo.gl/chNgQy

We use cookies to give you the best experience possible. By continuing we’ll assume you’re on board with our cookie policy