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In the Document, it's stated that: The use of absorption costing can lead to omission of segment costs because nonmanufacturing costs are not included as
In the Document, it's stated that:
"The use of absorption costing can lead to omission of segment costs because nonmanufacturing costs are not included as costs of a product." as well as "Using absorption costing for segmented income statements can lead to: under-costing of segments & omission of upstream and downstream costs."
How does this happen though? I don't understand how absorption costing can lead to these problems. I'm hoping a tutor can expand on this and explain it in simpler terms.
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