A disadvantage of absorption costing is
A) that it is not a useful format for decision making.
B) that it assigns only manufacturing costs to the product.
C) All of these.
D) None of these.

Question

Quizplus · Accepted Answer

Absorption costing includes fixed overhead costs in the product cost, which can result in distorted product costs and misleading information for decision making. Meanwhile, variable costing is a better method for decision making. Therefore, choice A is the correct answer as it highlights a significant disadvantage of absorption costing.

A Disadvantage of Absorption Costing Is