What is the major difference between absorption costing

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Reference no: EM133415574

Case Study: To boost. profits and keep up with short-term incentives, some automakers. used an accounting. trick, overproducing while "absorption costing".

But Toyota. has a smart. production system, Just-in-Time. It means. that a manufacturer makes only what is needed, and only when it is needed..

Questions:

(1). A major. criticism of absorption. costing is the incentives it creates. for managers to overproduce. and thereby build inventories.. How does Toyota prevent the overproduction?

(2). What's the. major. difference between absorption costing and variable. costing? What. are the advantages of variable costing.?

Reference no: EM133415574

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