Disadvantages of Absorption Costing

Fixed Costs are Period Costs
Fixed costs are considered to be period costs and hence they do not have any future benefit so they should not be included in the cost of the product.
Affects Decision Making
Absorption Costing is not useful in decision making as it is not helpful when it comes to solving managerial problems such as selection of product mix etc where the use of variable costing is required.
Impact on the Long-Term Profit
The managers are able to increase the net income for a short period of time, but this effects the long term profits of the company as higher inventory costs are passed on to the next years.

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