Most countries require some form of absorption costing for external reports.a. true
What is Absorption Costing ?
A costing technique called absorption costing estimates the expenses related to the manufacture of a good. This costing technique involves a thorough assessment of all costs related to product manufacturing.
In absorption costing, direct expenses like the price of purchasing raw materials, labor costs, and so on are assessed along with indirect costs like the price of purchasing a facility, electricity bills, and other expenditures. The absorption costing approach totals up all expenses associated with a finished good, including indirect and overhead costs.
All non-manufacturing expenditures (including selling and administrative expenses) are regarded as "period costs" under U.S. GAAP since they are recorded as expenses on the income statement at the time they are incurred.
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