Absorption Costing is a managerial accounting method for capturing all costs associated with manufacturing a particular product. The direct and indirect costs, such as direct materials, direct labor, rent, and insurance, are accounted for by using this method.It is sometimes called full costing because it includes all of the expenses related to producing a product. This includes both variable and fixed costs. The only cost that is not included is the cost of goods sold (G/S), which represents the difference between revenue and variable cost.
