During the current fiscal year, the CEO has noticed the factory manager has been producing more units
Question:
During the current fiscal year, the CEO has noticed the factory manager has been producing more units than what the budgeted called for. The factory manager’s bonus is based on absorption costing operating income, so the CEO assumes he has the best interest of the firm in mind when making these production decisions. What advice would you give to the CEO? (For each of the following phrases, indicate “True – give this advice to CEO” or “False – do not give this advice to CEO”
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Principles of Accounting
ISBN: 978-1133626985
12th edition
Authors: Belverd E. Needles, Marian Powers and Susan V. Crosson