Absorption costing, also known as full costing, encompasses an accounting process where all manufacturing costs, both fixed and variable, are absorbed by the product. This method assigns a portion of fixed overhead costs to each unit produced, resulting in a more comprehensive understanding of product costs.
Cost Application refers to the allocation of costs to a product, process, or department using a rational allocation basis. For example, rent expense can be allocated to each department based on its square footage.
A cost object is any item for which a separate measurement of costs is desired, including products, services, customers, or specific operations.
Full costing, also known as absorption costing, is an accounting method where all fixed and variable manufacturing costs are considered to be product costs.
The costs of production when charged to the cost units and expressed as costs of individual products. Product costs may include both direct costs and indirect costs (overhead); many different costing methods, such as absorption costing, activity-based costing, and process costing, are used in computing product costs.
