A manager can increase operating profit by deferring maintenance beyond the current accounting period when absorption costing is used.

Question

Quizplus · Accepted Answer

Deferring maintenance can lower current period expenses, which can increase net income and operating profit when using absorption costing. However, this strategy may lead to higher expenses and decreased profitability in future periods due to the build-up of deferred maintenance.

A Manager Can Increase Operating Profit by Deferring Maintenance Beyond