If bonuses are awarded to a manager based on operating income, the manager may choose to increase production to meet the desired operating income when using
A)variable costing to increase net income
B)variable costing to decrease net income.
C)absorption costing to increase net income.
D)variable costing to increase net income.

Question

If bonuses are awarded to a manager based on operating income, the manager may choose to increase production to meet the desired operating income when using
A)variable costing to increase net income 
B)variable costing to decrease net income.
C)absorption costing to increase net income.
D)variable costing to increase net income.

Quizplus · Accepted Answer

Under absorption costing, fixed manufacturing overhead is allocated to each unit produced, so increasing production can spread these costs over more units, reducing the cost per unit and increasing operating income.

If Bonuses Are Awarded to a Manager Based on Operating