Calculate net income to determine bonus

Assignment Help Accounting Basics

Reference no: EM13158136

The controller for Yi Company wants to encourage managers of the different product lines to minimize production to reduce the carrying costs of excess inventory. Managers are given bonuses based on the financial accounting net income for their product line. Which one of the following methods, used internally, would best accomplish this?

a. Use absorption costing to calculate net income to determine their bonus.

b. Use variable costing to calculate net income to determine their bonus.

c. Use throughput costing to calculate net income to determine their bonus.

d. Use ABC rather than predetermined overhead rates to allocate overhead.

Reference no: EM13158136

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