Absorption costing

Figure 8.2 illustrates the format of a typical absorption costing exercise. This exercise can easily be used to calculate the overall profit or loss of each enterprise and its profit margin. See for example Fig. 8.3. One of the difficulties of this exercise is allocating the fixed costs between the various enterprises. Take housing for example if the shed is shared between beef cattle and sheep, then the allocation of the cost could be made on a space and time basis. On a large-scale farm with several workers there will probably be a shepherd, a stockman, and a tractor driver for the arable crops. However, on a smaller farm where the farmer and his family do all the work then division of time between...

The costings exercises can also help with decisions on pricing (see Chapter 9, Marketing Organic Produce). The absorption costing... 

The vendor claims that when used for small spiU cleanup, RamSorb-1 is able to absorb 4 to 6 times its own weight in oil, at an absorption cost of about 0.79/gal. This cost does not include disposal (D17810T, p. 2). 

Indicating whether the rate includes fixed costs, as in absorption costing, or not, as in direct costing. 

Absorption costing is a factor in decisions to pack work into production schedules near the end of accounting periods. If management believes it will be short of its goals, it might make more stuff betting that it can be sold at some point. Fixed costs will be absorbed, and reported profit will improve for that period. This will also put off the day of reckoning if the stuff they make does not sell. 

Material Density (Y, g/cc) Tensile strength (a, MPa) Elastic modulus (e, GPa) Specific strength (a/y) Specific modulus (e/y) Elongation at failure (%) Moisture absorption (%) Cost (S/lb)... 

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