Which of the following steps can a management take to reduce the undesirable effects of absorption costing?

• Budgeted level of production: 3200
• Units produced in January: 2560
• Units sold in January: 1920
• Inventory, January 1st: 0 units

• Budgeted level of production: 3200
• Units produced in January: 2560
• Units sold in January: 2240
• Inventory, January 1st: 0 units

• Budgeted level of production: 1700
• Units produced in January: 1360
• Units sold in January: 1020
• Inventory, January 1st: 0 units

Company X employs 4 designers and 6 accounts managers. Direct and indirect costs are applied on a professional labor-hour basis that includes both designers and account managers. Company X presented the following information:

• Indirect costs: $300000
• Annual salary of each designer: $90000
• Annual salary of each account manager: $60000
• Total professional hours: 15000

The following information is available for Company X, with fixed costs at $640000:

Product A:

• Units sold: 20000
• Selling price: $100 /unit
• Variable costs: $40 /unit

Product B:

• Units sold: 5000
• Selling price: $200 /unit
• Variable costs: $120 /unit

Company X presents the following information:

• Cost of goods sold: $21000
• Finished goods inventory, January 1st: $10500
• Finished goods inventory, January 31st: $4200
• Work in progress inventory, January 1st: $6300
• Work in progress inventory, January 31st: $3150

Based on this information, determine the total amount of manufacturing costs for the period.

The following information is available for Company X:

• Units sold: 50000
• Contribution margin: $500000
• Income tax rate: 25%

How many units does Company X need to sell in order to increase the net income after taxes by $75000

• Budgeted level of production: 3200
• Units produced in January: 2560
• Units sold in January: 1920
• Inventory, January 1st: 0 units

Which of the following is the most important reason to classify costs into a four-level hierarchy?