Cost Accounting (15th Edition)

Published by Prentice Hall
ISBN 10: 0133428702
ISBN 13: 978-0-13342-870-4

Chapter 9 - Inventory Costing and Capacity Analysis - Assignment Material - Questions - Page 358: 9-10

Answer

To reduce the negative aspects of absorption costing for evaluating a plant manager's performance, you can: 1. Change the accounting method: Switch to variable or throughput costing to discourage overproduction. 2. Extend the evaluation period: Consider performance over several years to reduce short-term focus. 3. Use nonfinancial measures alongside financial ones for a more comprehensive assessment.

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