Motivational considerations in denominator-level capacity selection (continuation of 9-31). 1. If the plant manager of the Jacksonville Brewery gets a bonus based on operating income, which denominator-level capacity concept would he prefer to use? Explain. 2. What denominator-level capacity concept would Castle Lager prefer to use for U.S. income-tax reporting? Explain. 3. How might the IRS limit the flexibility of an absorption-costing company like Castle Lager attempting to minimize its taxable income?
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