Decision-making problems that could occur when using absorption costing include inappropriate __pricing____ decisions, and decisions made to ___drop___ products that are, in fact, profitable.
What is absorption costing?
Absorption costing is the costing method that includes both direct and indirect costs in the costs of a product.
It is the opposite of variable or marginal costing, which takes into account only the direct costs in determining the product cost.
Thus, the decision-making problems with absorption costing include pricing decisions and decisions involving whether to drop profitable products.
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