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Absorption costing does not understand the importance of fixed costs. In absortption costing, fixed costs are absorbed to unit, therefore it is hard to distinguish between variable and fixed costs.

And also, the variability of profit will cause confusion, the reason is that the net profit varies with both sales and stock changed under absorption costing.

Absorption costing does not understand the importance of fixed costs. In absortption costing, fixed costs are absorbed to unit, therefore it is hard to distinguish between variable and fixed costs.

And also, the variability of profit will cause confusion, the reason is that the net profit varies with both sales and stock changed under absorption costing.

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