What is 'absorption costing' in SAP CO - Controlling?

absorption costing - Overview

• Component: CO

• Component Name: Controlling

• Description: A costing approach that does not differentiate between fixed and variable costs. Costs are allocated to cost objects without being categorized as fixed or variable.

absorption costing - Details

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  Key Concepts: 
  Absorption costing is a method of cost accounting used in SAP Controlling (CO) that assigns all manufacturing costs to the products produced. This includes both direct and indirect costs, such as labor, materials, overhead, and other expenses. The goal of absorption costing is to accurately reflect the total cost of producing a product. 
  
  How to use it: 
  In SAP Controlling, absorption costing is used to calculate the cost of goods sold (COGS) for each product. This information can then be used to determine the profitability of each product and make decisions about pricing and production. Absorption costing can also be used to compare the cost of producing a product with the selling price, which can help identify areas where costs can be reduced or efficiency improved. 
  
  Tips & Tricks: 
  When using absorption costing in SAP Controlling, it is important to ensure that all costs are accurately accounted for. This includes both direct and indirect costs, such as labor, materials, overhead, and other expenses. It is also important to ensure that all costs are allocated correctly so that the total cost of producing a product is accurately reflected. 
  
  Related Information: 
  For more information on absorption costing in SAP Controlling, please refer to the official SAP documentation at https://help.sap.com/doc/saphelp_erp60_sp/6.0/en-US/f3/f3d2b9a7e211d189700000e8322d00/content.htm?no_cache=true