How is electricity cost treated in this absorption costing example?

How is electricity cost treated in this absorption costing example?

Absorption vs. Variable Costing Handout for 3.4 Dropbox

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Question
1. How is electricity cost treated in this absorption costing example?

2. What is the plant manager’s salary considered in this example?

3. Where do fixed manufacturing costs show up if units are manufactured but not sold (inventory increases)?

4. What incentive does the plant manager have regarding inventory if absorption costing is used?

5. Would variable costing give the same operating profit result as absorption costing if more products were sold than produced? Why or why not?

6. If you were the controller for a Ford Motor production facility, what justification would you use when explaining why you favor variable costing when determining the value of automobiles produced each month?

7. Why might the top executives prefer absorption costing when production exceeds sales in a given month?