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I have studied a line abundance time but can not have perfect meaning.
Absorption costing helps to determine profitability of several products.
Is it talking about gross profit or what?I think what it is trying to say is that you have a fixed overhead absorption rate worked out on, say, labour hours then the total absorption cost of a variety of products can be calculated. This includes production overheads.
If you know each item’s cost you can work out a its profit per unit. This is each unit’s gross profit and to get the company’s net profit you need to deduct all remaining expenses from the total gross profit.
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