Prior to the beginning of an accounting year, a company estimates the annual cost of vacation pay, bonuses, and incentive awards for its employees. It then uses its estimates to assign these costs to production during the year. One manager argues that it does not make sense to estimate costs such as bonuses and incentive pay that depend on results which can only be determined when the accounting period is over. "If we incur a loss, there will be no bonus, but because we planned for profitable operations, the cost of bonuses that don't exist are assigned to products all year." What is the rationale for the treatment used. Comment on the manager's statement.