BNET Business Dictionary
Business Definition for: Absorption Costing
- an accounting practice in which fixed and variable costs of production are absorbed by different cost centers. Providing all the products or services can be sold at a price that covers the allocated costs, this method ensures that both fixed and variable costs are recovered in full. However, should sales be lost because the resultant price is too high, the organization may lose revenue that would have contributed to its overhead.
- See also Marginal Costing
Additional Resources
- Hayashi Construction, Inc.: a Business Method of Accounting Using Absorption Costing, Including a Method of Drawing a Break-Even Chart Was Admitted as a Patent by the USPTO
- SAKATA, Japan -- Hayashi Construction, Inc. was awarded a U.S. patent for an invention entitled "Accounting System for Absorption Costing." Absorption costing is an accounting system generally and widely used in making an external income statement. Representative absorption costing is standard costing under absorption costing. Costing relative to the absorption...
- Research articles 2008-06-11
- ABC v TOC: Same cloth as absorption v marginal, different style and cut.
- The accounting response to the growth of advanced manufacturing technologies and related management philosophies is restricted by the adherence to obsolete costing methods, such as absorption costing, according to Goldratt. However many accountants claim The accounting response to the growth of advanced manufacturing technologies and related management philosophies is restricted...
- Research articles 1998-04-01
- Absorption costing for decision-making.
- Activity-based costing ABC is supposed to improve the decision-making and planning process, a principle recognized by Kaplan and Cooper's approach to ABC. It is generally accepted that absorption costs should not be implicated in decision-making but ZimActivity-based costing ABC is supposed to improve the decision-making and planning process, a principle...
- Research articles 1997-10-01
- Criticisms Of Absorption Cost Systems: Inaccurate Product Costs
- Activity Based Costing ABC method computes the overall product cost taking into account the cost involved in the intermediate activities leading to delivery of the final product. ABC refines costing systems by focusing on individual activities as the fundamental cost object. It assigns costs to cost objects based on the...
- Presentations 2003-01-01
- Locked on stock with two smoking barrels.
- Byline: Mitch Gaynor Dec 21, 2005 (Queensland Business Review - ABIX via COMTEX) -- The Australian Taxation Office ATO has instructed retailers to use the "absorption costing" method to value...
- Research articles 2005-12-21
- Retail stock shock.
- Byline: Mitch Gaynor Nov 17, 2005 (Queensland Business Review - ABIX via COMTEX) -- The Australian Taxation Office ATO issued a draft ruling in late August 2005. The draft ...
- Research articles 2005-11-17
- Best Practices For Increasing Your Profits In A Down Economy
- This webcast talks on "Best Practices for Increasing Your Profits in a Down Economy". It tries to cover the issues like identifying the hidden profit opportunities with event-driven costing, implementing on profit initiatives, turning data into profits etc. The example of Owens and Minor Distributors are taken to identify the...
- Webcasts 2003-05-20
- CH Energy Group Q3 2007 Earnings Call Transcript
- Question-and-Answer SessionOperator Thank you. Operator Instructions Our first question is from Maurice May from Power Insights. Please go ahead. Maurice May - Power Insights Yes, good afternoon folks. Steven Lant Good afternoon. Maurice May - Power Insights A couple questions on Central Hudson, your core utility. You said there...
- Earnings calls 2007-10-29
