Australia Absorption profit reporting

[Tracey]

Hi everyone!
I have a question, hope anyone can help me! many thanks!

The last few years, my bonus as a production manager has been based on the report or the profit figure when we’ve been using absorbtion profit reporting and now you’re saying my bonus is going to be base on a direct income statement profit. I’m just wondering can you explain what’s going to mean for me this year and possibly, maybe the years to come how that is going to affect my bonus in the long term?

 

[Fidget]

It's impossible to tell without knowing the nitty-gritty of both schemes to be able to do some number crunching. Experience tells me though that generally when a bonus scheme for employees changes... it tends to mean that the new one coming in, is less favourable than the current one so either less of a bonus is payable or more work has to been done to achieve the same level as the current bonus. That's not always the case, but I think it's fair to say that it is the usual case.

 

[Tracey]

Thank you so much for your answer!