Select your language

Suggested languages for you:
Log In Start studying!
Answers without the blur. Just sign up for free and you're in → Illustration

Q-21-1RQ

Expert-verified
Horngren'S Financial And Managerial Accounting
Found in: Page 1166

Short Answer

What is absorption costing?

Answer

Absorption costing is the traditional method of calculating product cost per unit.

See the step by step solution

Step by Step Solution

Step 1: Meaning of absorption costing

Absorption costing is the traditional method of calculating product cost per unit and operating income. This method gives equal importance to fixed cost and does not believe in the concept of irrelevant cost or sunk cost.

Step 2: Difference between variable and absorption costing

The main difference is absorption costing and variable costing is that the former method considers fixed manufacturing overhead cost as product cost, whereas the latter method considers it as period cost.

Most popular questions for Business-studies Textbooks

Icon

Want to see more solutions like these?

Sign up for free to discover our expert answers
Get Started - It’s free

Recommended explanations on Business-studies Textbooks

94% of StudySmarter users get better grades.

Sign up for free
94% of StudySmarter users get better grades.