Absorption costing, governance (continuation:of 9-41). Mary Easson decides to undertake a systematic investigation of how the combination of the existing division manager bonus plan and absorption costing may be causing division managers to make decisions not in the best interests of Advanced Engineering Company (AEC). She will first visit the Morristown division of AEC, which manufactures more than 100 different metal products.

¥ REQUIRED 1. Name three types of behaviour that Easson should look for that would suggest problems for AEC with the existing bonus plan and accounting system.

2. What possible changes might Easson consider if her investigation produces widespread evidence of systematic poor decision making by division managers at AEC?

LO1