Many Companies Are Experimenting with Some Variation of Their Basic

question 48

Essay

Many companies are experimenting with some variation of their basic compensation plans such as awards in the form of cash or points that can be used to purchase prizes. Award programs can be styled to suit a variety of sales objectives. List and describe four possible objectives.

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Definitions:

Absorption Costing

The accounting methodology that integrates all costs related to manufacturing, including direct materials, direct labor, and both forms of manufacturing overhead—variable and fixed—into a product's total cost.

Variable Costing

A financial tracking method that considers just the variable operating costs (direct materials, direct labor, and variable manufacturing overhead) in the pricing of merchandise.

Unit Product Cost

The overall expense incurred to manufacture a single item, encompassing direct materials, direct labor, and overhead costs.

Absorption Costing

Absorption costing is an accounting method that includes all of the manufacturing costs (direct materials, direct labor, and overhead) in the cost of a product.