XYZ Limited is a furniture manufacturer. One of the company's factories operates a system of absorption costing.

REQUIRED

$($a$)$ State two limitations of absorption costing. $(2$ marks$)$

Additional information

The factory makes kitchen tables.

There are two production departments: cutting and assembly.

The following forecast information is available for the year:

$\backslash$table$[[,$Cutting department,Assembly department$],[$Overheads$,$$$68400,$$$49200$