The comments below were listed in the production manager performance review.
Which comments could signal an unethical abuse of absorption costing method?
(highlight each comment that signals a potential ethical abuse, do not highlight capitalized titles)
Highlight Answer(s) Below
Production levels are nearly double budgeted levels
Direct labor costs per hour are stable
Direct labor efficiency is at standard levels
Direct materials costs are higher than standard
Direct material use is lower than standard
QUALITY & TURNOVER:
Labor turnover is steady at 5% (no change from prior year)
Quality measures are up slightly, generally due to higher quality materials
PER UNIT COSTS:
Variable cost per unit is up slightly
Total fixed costs are slightly below budgeted levels.
Fixed costs per unit are half historical levels.