Absorption costing can distort the costs to provide products and services if they represent greatly different levels of support from indirect resources.

Question

Quizplus · Accepted Answer

Absorption costing allocates all manufacturing overhead costs to products, regardless of the actual consumption of overhead resources by each product, potentially misrepresenting the true cost of producing different products with varying levels of support from indirect resources.

Absorption Costing Can Distort the Costs to Provide Products and Services