Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Jin Pillows produces and sells a decorative pillow for $75.00 per unit. In the first month of operation, 2,000 units were produced, and 1,750 units
Jin Pillows produces and sells a decorative pillow for $75.00 per unit. In the first month of operation, 2,000 units were produced, and 1,750 units were sold. Actual fixed costs are the same as the amount budgeted for the month. Other information for the month includes: Variable manufacturing costs $20.00 per unit Variable marketing costs $3.00 per unit Fixed manufacturing costs $7.00 per unit Administrative expenses, all fixed $15.00 per unit Requirements 1. Jin Pillows uses absorption costing and variable costing to calculate profits. Which method leads to higher profits? (1 mark) 2. Use formula approach to calculate the differences in profit between absorption costing and variable costing (1 mark) 3. Jin Pillows uses absorption profit to determine the bonus for the manager. Please identify the potential undesirable behaviour of the manager. Please also identify two ways of addressing the undesirable behavior
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started