For every unit that is produced but not sold,absorption costing "hides" some of the fixed manufacturing overhead in ending Finished Goods Inventory.

Question

Quizplus · Accepted Answer

Absorption costing includes fixed manufacturing overhead in the cost of each unit produced, and if some units are not sold, that fixed overhead is included in the valuation of the ending Finished Goods Inventory.

For Every Unit That Is Produced but Not Sold,absorption Costing