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

question 26

Multiple Choice

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 when using

• A)variable costing, in order to increase net income.
• B)variable costing, in order to decrease net income.
• C)absorption costing, in order to increase net income.
• D)absorption costing, in order to decrease net income.

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Definitions:

Production Possibility Frontier

A curve depicting the maximum achievable combination of two goods that can be produced with available resources and technology.

Technological Improvements

Advancements or enhancements in technology that lead to more efficient processes, better products, or improved ways of doing things.

Outward Shift

In economics, refers to the movement of a curve away from the origin in a graph, indicating an increase in quantity supplied or demanded due to various factors.

Production Possibility Frontier

A plot that displays the extreme production possibilities for two goods, based on an array of resources and additional factors.