Which of the following is a disadvantage of absorption costing method?
A.
Fixed cost allocated to products on the basis of the cost of activities used in producing them
B.
Variable costs are not taken into product final costs
C.
Using marginal cost of producing addition units
D.
Limited understanding of true costs incurred
The Answer Is:
D
This question includes an explanation.
Explanation:
Absorption costing is an approach to allocating overheads in which indirect costs are loaded or absorbed into direct costs related to specific jobs, processes or outputs, using an estimated basis of allocation.
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