ariable Costing for Management Analysis ther TIF 7-1 Absorption costing operating income The Southern Division manager of Texcaliber Inc. is growing concerned that the division will not be able to meet its current period income objectives. The division uses absorption costing for internal profit reporting and had an appropriate level of inventory at the beginning of the period. The division manager knows that he can boost profits by increasing production at the end of the period. The increased production will allocate fixed costs over a greater number of units, reducing cost of goods sold and increasing earnings. Unfortunately, it is unlikely that addi- tional production will be sold, resulting in a large ending inventory balance. The division manager has come to Aston Melon, the divisional controller, to determine exactly how much additional production is needed to increase net income enough to meet the division's profit objectives. Aston analyzes the data and determines that the division will need to increase inventory by 30% in order to absorb enough fixed costs to meet the division's income objective. reports this information to the division manager. Aston Is Aston acting ethically? 2S 2riae

Question

Is Aston acting ethically ? 

ariable Costing for Management Analysis
ther
TIF 7-1 Absorption costing operating income
The Southern Division manager of Texcaliber Inc. is growing concerned that the division will
not be able to meet its current period income objectives. The division uses absorption costing
for internal profit reporting and had an appropriate level of inventory at the beginning of the
period. The division manager knows that he can boost profits by increasing production at the
end of the period. The increased production will allocate fixed costs over a greater number of
units, reducing cost of goods sold and increasing earnings. Unfortunately, it is unlikely that addi-
tional production will be sold, resulting in a large ending inventory balance.
The division manager has come to Aston Melon, the divisional controller, to determine exactly
how much additional production is needed to increase net income enough to meet the division's
profit objectives. Aston analyzes the data and determines that the division will need to increase
inventory by 30% in order to absorb enough fixed costs to meet the division's income objective.
reports this information to the division manager.
Aston
Is Aston acting ethically?
2S
2riae

Image Transcription

ariable Costing for Management Analysis ther TIF 7-1 Absorption costing operating income The Southern Division manager of Texcaliber Inc. is growing concerned that the division will not be able to meet its current period income objectives. The division uses absorption costing for internal profit reporting and had an appropriate level of inventory at the beginning of the period. The division manager knows that he can boost profits by increasing production at the end of the period. The increased production will allocate fixed costs over a greater number of units, reducing cost of goods sold and increasing earnings. Unfortunately, it is unlikely that addi- tional production will be sold, resulting in a large ending inventory balance. The division manager has come to Aston Melon, the divisional controller, to determine exactly how much additional production is needed to increase net income enough to meet the division's profit objectives. Aston analyzes the data and determines that the division will need to increase inventory by 30% in order to absorb enough fixed costs to meet the division's income objective. reports this information to the division manager. Aston Is Aston acting ethically? 2S 2riae

Expert Answer

Want to see the step-by-step answer?

See Answer

Check out a sample Q&A here.

Want to see this answer and more?

Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*

See Answer
*Response times vary by subject and question complexity. Median response time is 34 minutes and may be longer for new subjects.

Related Accounting Q&A

Find answers to questions asked by student like you
Show more Q&A

Q: Neyman Inc. has the following data for purchases and sales of inventory: Date Units Cost per Unit...

A: Cost of goods sold includes all the direct cost of a product that are incurred in its production.Cos...

Q: The following transactions were completed by Irvine Company during the current fiscal year ended Dec...

A: An allowance for doubtful debt account is prepared to record the amount which have less chances to b...

Q: Wendy Chen established Windy City Coaching (WCC) to provide teen counseling and executive coaching s...

A: Activity Based Costing:Activity based costing is a costing that identifies activities in an organiza...

Q: Susan is a single taxpayer, 26 years of age, with AGI of $28,000 and no tax-exempt income. She did n...

A: As per IRS it is mandatory to file 1040 form if the income earned in year 2018 is $12,000 or more fo...

Q: Estefan’s accounts showed a gross profit for the year of £27,200. After the accounts were prepared i...

A: Gross Profit:  Gross margin is the amount of revenue earned from goods sold over the costs incurred ...

Q: WRITE $3878295 IN MILLIONS

A: While writing any amount in millions, commas should be put before every three numbers.

Q: Federal Income Tax WithholdingBob Browning's weekly gross earnings for the present week were $2,770....

A: Calculate the federal income tax with holding:

Q: Silver Head Company is a manufacturer of kitchen utensils. It produces all of itsproducts in one dep...

A: Equivalent Units: An equivalent unit of production is an indication of the amount of work done by ma...

Q: Present and future value tables of $1 at 9% are presented below.    PV of $1 FV of $1 PVA of $1 F...

A: Future value refers to the amount of an investment that will be received after a period by adding in...