[chanee23]

@alighere said:
Hi.

I have noticed something when preparing the p&l statement under absorption costing fir which i need some assistance.

After calculating the gross profit, we are supposed to calculate the under/over absorbed. However the way it is done is that the OAR is multiplied by the amount produced; not the amount actually sold. Why is that ?. The p&l only would show the amount sold accrued to the amount it took to produced the sold items. Shouldn’t the overheads absorbed be the OAR x the amount sold.

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