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Sir sorry to disturb you again and again but I truly have no other substitute.
Sir, my question is that, I read in absorption costing disadvantages (in Kaplan) that it encourages over production. Can you have some light on it please?
The more units you plan to make, the lower the fixed overhead cost per unit because the fixed costs are spread over more units.
This lowers the TAC of each unit which suggests efficiency……even though the units made might be far more than demanded by customers
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