Question
Flores Manufacturing rewards the companys plant manager with a year-end bonus based on the increase in the plants net income. For purposes of determining the
Flores Manufacturing rewards the companys plant manager with a year-end bonus based on the increase in the plants net income. For purposes of determining the managers bonus, should net income be calculated using variable costing or absorption costing? Support your recommendation. Assume Flores sales personnel are rewarded on the basis of total sales. Would this be in the best interest of the company if the goal is to maximize profits? Why or why not?
Why might the management at Flores Manufacturing want to analyze product profitability rather than simply assess total sales?
Minimem 250 word response please.
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