C02 · Lesson 8 of 22 · 14 min · 5 hands-on tasks

Absorption vs Variable Costing

Trailhead's new plant manager is paid a bonus on operating profit. Their plan: build 12,000 more bikes than dealers buy. Without selling a single extra bike, the loss shrinks by $1.9M. See where that 'profit' hides, why the rules for outside reports allow it, and how variable costing keeps managers honest.