ABSORBED COSTS

incorporates both variable and fixed costs.

Absorbed costs are costs included in product cost under absorption costing, meaning both variable costs and fixed manufacturing overhead are allocated to units produced.

- Used in product/service costing, budgeting, and variance analysis.
- Used to support pricing decisions and profitability analysis by cost behavior and drivers.

- Example: The costing team uses **ABSORBED COSTS** to allocate costs and analyze margins by product line.

- Why it matters: Improves cost accuracy, supports better pricing and budgeting, and strengthens performance measurement.