Apr 292018

A cost accumulation and reporting method that treats the costs of all manufacturing components (direct material, direct labour, variable overhead, and fixed overhead) as inventoriable or product costs; it is the traditional approach to product costing; it must be used for external financial statements and tax returns

I hope that my definition has helped you understand what Absorption Costing is. If not, please do leave a comment below. I read every comment and will reply to clarify your questions just as soon as I can.

If you are interested in finding out more on explanations of banking words such as Absorption Costing then please sign up for the ‘Word of the Day’ email. You will receive one definition in your mailbox each morning. Its a great way to learn some new terms which will really help you be an all-round expert at work.

Your thoughts

Did the definition of Absorption Costing help you? Please leave your comments below.

 Leave a Reply

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>