Absorption Costing

This video explains the concept of Absorption Costing in Managerial Accounting. A comprehensive example is provided to explain how absorption costing is used to calculate per unit product costs as well as to create an absorption costing income statement. The video also contrasts the absorption costing method with the variable cost method and discusses how the use of absorption costing can lead to distorted measures of profitability and perverse managerial incentives.
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Robert, I really appreciate all your comments. Positive comments like yours keeps me motivated to continue putting out more videos. Best of luck to you on your managerial accounting final!

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Thank you sooooo much.

[@Edspira]

No problem. In the event you need more instruction on job order costing, I have 8 videos on this topic: edspira.com/lessons/job-order-costing Thanks for watching!

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Thank you

[@Edspira]

Welcome!

[@nisserov]

New Business Controller at my new job. They are using Absorption Costing, which my old job never did - we only just variable costing. This firm moved from variable to Abs costing five years back due to new management. I´ve only seen disadvantages with this method, and frankly was kinda hoping that you could shed some light onto it. Why are companies using it for other reasons that "well everybody else is using it for external sales"? There must be something good with it....I hope :/

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A very good learning video...

[@Edspira]

Thank you sir!

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thanks

[@johnkang6221]

My professor literally can't even teach. How hard is it to give us some examples like this video.

[@nabeelahmad5015]

Oooh perfect,now i know that why absorption costing profit increases when their is increase in production.

[@huynhtrungkien6233]

Setting => playback speed => 1.75 Your welcome!

[@vijithsoman]

thank you that helped!

[@Edspira]

No problem. Happy studies!

[@thomasarop863]

it's great help ever

[@bricksInMyBp]

If I understand correctly, under Abs Costing, CGS is calculated both on Units Sold (DM+DL+MO) and Fixed MO divided by units produced? Whereas sales is only calculated on units sold. (referring to 60000/20 in Q2, as this is the only place I see the 20 units referred to when calculating CGS).

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perfect same as alwayssss

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great video

[@Edspira]

+Farjad Mallick Thanks!

[@hassanladha9337]

perfect

[@elicajeles]

Thank you for this! I'm trying to defend Absorption Costing for our debate.

[@Edspira]

+Elidesa Cajeles (5sosfifthhero) Thank you and good luck with the debate!

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+Education Unlocked really nice for studying online...looking forward for more stuff..!

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Better than my uni lecturer

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ty