Absorption costing is one of two accounting methods that companies must choose. Here is a look at how it works and compares with variable costing, the other option.

Absorption costing is a managerial accounting method that captures all costs—both fixed and variable—associated with the manufacture of a particular product.

Analyzing costs can help companies make strategic, financially sound decisions. Activity-based costing and absorption costing are two popular accounting methods that companies employ when ...