In the years leading up to the 2008 recession, General Motors,
Ford, and Chrysler (the big three) were producing new vehicles in
excess of market demand. This led to large inventories on car
dealer’s lots across the United States. At the same time, under the
absorption costing method, profits were rising and executives at
these three companies were achieving their short-term incentive
targets. Explain how firms can increase net operating income simply
by producing more units under the absorption costing...