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Author Question: Kaiser Company just hired its fourth production manager in three years. All three previous managers ... (Read 83 times)

crobinson2013

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on: Mar 6, 2021

Question 1

Explain three methods under absorption costing that managers can use to improve operating income.

Question 2

Kaiser Company just hired its fourth production manager in three years. All three previous managers had quit because they could not get the company above the break-even point, even though sales had increased somewhat each year. The company was operating at about 60 % of plant capacity. The flatware industry was growing, so increased sales were not out of the question. 

I. R. Thinking took the job as manager of the production division with a very attractive salary package. After interviewing for the position, he proposed a salary and bonus package that would give him a very small salary but a large bonus if he took the operating income (using absorption costing) above the breakeven point during his very first year. 

Required: 
What do you think Mr. Thinking had in mind for increasing the company's operating income?
Horngren's Cost Accounting: A Managerial Emphasis ¦ Datar, Rajan ¦ 16th Edition
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Marked as best answer by crobinson2013 on Mar 6, 2021

Dominic

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Reply #1 on: Mar 6, 2021
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crobinson2013

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Reply 2 on: Mar 6, 2021
Excellent

Dnite

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Reply 3 on: Yesterday
Great answer, keep it coming :)

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