Absorption costing, management ethics (continuation of 9-47). 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 ofIndustrial Engineering Company (IEC). She will first visit the Morristown division ofIEC, 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 IEC with the existing bonus plan and accounting system.

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

COLLABORATIVE LEARNING PROBLEM