Introduction
Through the years as it pertains to planning Managers has developed techniques and methods of forecasting future costs. One of such methods is Absorption costing and activity founded costing (ABC)
What is Absorption costing?
Absorption costing is the traditional approach to costing and stock analysis, having been developed around the 1870s to 1920s is greatly used by the making companies. The theory behind absorption costing to disperse all overheads of the developing cost centers as well as the direct cost between your finished products, and treat all non-manufacturing over head as period costs. CIMA identified Absorption Costing as "a way of costing that, in addition to direct costs, assigns all, or a proportion of, creation overheads costs to cost products by means of one or more quantity of absorption rates. "
What is activity founded costing?
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