Definition of absorption costing in English:

absorption costing


  • [mass noun] A method of calculating the cost of a product or enterprise by taking into account indirect expenses (overheads) as well as direct costs.

    • ‘The ATO opinion was that full absorption costing was necessary for all retail and wholesale businesses.’
    • ‘It can bee seen that it is clear that the method of absorption costing adopted can have far reaching implications when considering the costing of any job.’
    • ‘The argument for using absorption costing in external reports seems to be based on the matching principle.’
    • ‘This booklet covers key areas within absorption costing such as product and period cost, advantages of marginal costing and advantages of absorption costing, and when to use these methods.’
    • ‘This is not to say that there is no role for absorption costing in business.’