If a division manager's compensation is based upon the division's net income, the manager may decide to meet the net income targets by increasing production
A)when using variable costing, in order to increase net income.
B)when using variable costing, in order to decrease net income.
C)when using absorption costing, in order to increase net income.
D)when using absorption costing, in order to decrease net income.

Question

Quizplus · Accepted Answer

Under absorption costing, fixed manufacturing costs are spread over more units when production increases, reducing the cost per unit and increasing net income if not all units are sold.

If a Division Manager's Compensation Is Based Upon the Division's