Behavioral Considerations under Absorption versus Variable Costing, homework help
Stellar Packaging Products Company notes the following results for 2016 for variable versus absorption costing. The company’s base volume is 4,000,000.
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Instructions:
Calculate the amount of the difference of additional compensation between the two income statement methods. If the decline in volume continues and Stellar makes 3.6 million units in 2017, should the company switch to variable costing as the basis of compensation? Why or why not? What might be the reaction of the production managers if this occurs?
Your paper should meet the following requirements:
- 2-3 pages in length
- Formatted in accordance with the CSU-Global Guide to Writing and APA Requirements.
- Document your sources
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