Tuesday, October 21, 2008

Assumption of Absorption Costing

There is one main assumption that an accountant must remember when using the absorption costing approach. This method assumes that consumers and purchasers do not react to prices at all when making their decisions to purchase.

It assumes that consumers will purchase the foretasted unit sales regardless of the price that is charged to them. It is important to remember this when using the absorption costing approach.

No comments:

Popular Accounting Problems

The information on this site is for informational purposes only and should not be used as a substitute for the professional advice of an accountant, tax advisor, attorney, or other professional.