另一个突出的方面是内部报告。正如上文所强调的，如果采用吸收成本法，则一旦实现销售，则将成本视为费用，将其视为库存。因此，如果实现低销售，与制造间接费用相关的大部分成本将作为库存消化。因此，虽然盈利能力会提高，但库存会大量积压。换句话说，在吸收成本法下，管理者可以通过建立库存、生产更多的产品来实现不良的激励，因为库存吸收了固定的制造成本，从而导致经营收入的增加。因此，Maria Cane建议采用吸收成本法，这种方法适用于外部报告，也适用于内部报告，这可能不是正确的决定(Watts and Zimmerman, 1986)。
Another important aspect which has been highlighted in the above example is that higher profits can be realized in case of absorption costing provided the sales of the company is lower than production. In case the production is equal to sales, the profitability will be same from both absorption and variable costing. Thus, the suggestion by Maria Crane can certainly lead to high profits to be shown in the financial statements
In case of absorption costing the cost incurred as part of overhead is divided in two parts, one of which goes into development of current assets i.e. inventory on the balance sheet, while the other component is highlighted in the income statement as expense. This is the way in which overhead cost should be accounted externally in the financial statements.
Another aspect that has been highlighted is that of internal reporting. As highlighted in the above discussion, in case of absorption costing the cost is considered as expense once sales are realized else, it is considered as inventory. Thus, if low sales is realized, most of the costs related to manufacturing overhead will be absorbed as inventory. As a result of this, although the profitability will increase, there will be huge pile up of inventory. In other words, undesirable incentives can be achieved by the managers under absorption costing with respect to build up of inventory, production of more units as inventory absorbs the fixed manufacturing cost and result in increase of operating income. Therefore, the suggestion of Maria Cane to use absorption costing, which is suitable for external reporting for internal reporting as well may not be correct decision (Watts and Zimmerman, 1986).
To overcome the above deficiency related to absorption, costing for internal reporting several methods may be employed. Firstly, variable costing method may also be used along with the absorption costing method. This is because same amount of operating profit is generated by variable costing as generated by use of absorption costing. Thus, comparison of operating profits from variable costing and absorption costing highlight the manipulation of operating profits as a result of unsold units or undesirable build-up of inventories.
Apart from the above, several steps may be taken by the management to reduce the undesirable effects of absorption costing. Some of these are as follows:
Focus on proper inventory planning in order to reduce the freedom of management to build up excess inventory.
Carrying Charge component may be included in the internal accounting system that will act as disincentive for creating excess inventory.
Such aspects lead to better performance evaluation based on absorption costing for internal reporting.