Full Costing

What is 'Full Costing'

Full costing is a managerial accounting method that describes when all fixed and variable costs, including manufacturing costs, are used to compute the total cost per unit. Full costing includes these costs when computing the amount of money it takes to produce and distribute one unit of output.

Full costing is also known as "full costs" or "absorption costing".

BREAKING DOWN 'Full Costing'

How a firm expenses its production and distribution costs will impact the structure of internal income statements. Because all costs incurred to sell a product are included with cost of goods sold, the firm's gross margin will be lower under the full costing method than the absorption costing method.

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RELATED FAQS
  1. How do fixed and variable costs each affect the marginal cost of production?

    Learn about the marginal cost of production, how to calculate the marginal cost, and how fixed costs and variable costs affect ... Read Answer >>
  2. What are the differences between absorption costing and variable costing?

    Examine the main differences between absorption costing and variable costing, along with the advantages and disadvantages ... Read Answer >>
  3. How are fixed costs treated in cost accounting?

    Learn how fixed costs and variable costs are used in cost accounting to help a company's management in budgeting and controlling ... Read Answer >>
  4. Why are fixed manufacturing costs included in inventories through the absorption ...

    Learn about the absorption costing method. Understand why fixed manufacturing costs are included in inventories through the ... Read Answer >>
  5. What are some of the advantages and disadvantages of absorption costing?

    Examine the absorption costing method for accounting purposes, and learn about the advantages and disadvantages associated ... Read Answer >>
  6. How is absorption costing treated under GAAP?

    Read about the required use of the absorption costing method for all external reports under generally accepted accounting ... Read Answer >>
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