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QUESTION 18 A downside to absorption costing is: A not including fixed manufacturing overhead in the cost of the product B. t
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Answers: D) That it is not well designed for Cost - Volume- Profit Analysis

For CVP analysis total cost must be Divided into Fixed cost and Variable cost. From the Absorption income statement, it is difficult to make the division of total cost into fixed and Variable. Under Absorption costing product cost includes the Fixed Manufacturing Overheads also. GAAP is Allowed only the Absorption costing income Statement.

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