ABSORPTION COSTING Definition

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ABSORPTION COSTING is the method under which all manufacturing costs, both variable and fixed, are treated as product costs with non-manufacturing costs, e.g. selling and administrative expenses, being treated as period costs.

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TARGET COSTING is a disciplined process for determining and realizing a total cost at which a proposed product with specified functionality must be produced to generate the desired profitability at its anticipated selling price in the future.

VOLUME GAIN is to obtain advantages due to increase in volume, such as value increase, points in gross margin or profit.

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