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Absorption costing

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Absorption costing
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Sayed Arif
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Absorption costing - December 9th, 2013

what is Absorption costing? ,discuss Absorption costing in detail?
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Asad Khan
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Re: Absorption costing - December 9th, 2013

As the name suggests, absorption costing is the method of costing in which the entire cost of manufacturing a product or providing a service is absorbed in it. In contrast to the variable costing (Activity based costing) method, it includes both fixed and variable costs for absorption in addition to the direct costs. As all the costs incurred are absorbed, this method is also sometimes referred to as Full absorption costing or Total absorption costing (TAC).
Variable costing is generally used for the managerial decision making whereas as per the Generally Accepted Accounting Principles (GAAP), an organization is bound to use the absorption costing method for financial reporting purposes.

Example
No. of units produced = 100
Direct Variable cost per unit = Rs. 2
Variable Overhead cost per unit = Rs. 1
Fixed Overhead cost = Rs. 200
Under Absorption Costing,
Total Cost per unit = 2 + 1 + (200/100)= Rs. 5
Under Variable Costing,
Total Cost per unit = 2 + 1 = Rs. 3
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Re: Absorption costing - April 20th, 2016

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Originally Posted by sayed123 View Post
what is Absorption costing? ,discuss Absorption costing in detail?
Hey mate,

Well, i found Notes on Absorption Costing or Full Costing System and wanna share it with you and other's. So please download and check it.
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File Type: pdf Notes on Absorption Costing or Full Costing System.pdf (825.1 KB, 0 views)
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