Absorption Cost Calculator

Calculate Absorption Cost (AC)







Formula

The formula to calculate the Absorption Cost (AC) is:

\[ AC = \frac{DL + MC + O}{U} \]

Where:

Example

Let's say the direct labor costs (\( DL \)) are $5000, the material cost (\( MC \)) is $3000, the total variable and fixed manufacturing overhead (\( O \)) is $2000, and the number of units produced (\( U \)) is 1000. Using the formula:

\[ AC = \frac{DL + MC + O}{U} = \frac{5000 + 3000 + 2000}{1000} = \frac{10000}{1000} = 10 \text{ dollars/unit} \]

So, the Absorption Cost (\( AC \)) is $10 per unit.

What is Absorption Cost?

Absorption cost refers to the total cost assigned to each unit of production, including direct labor, material costs, and both variable and fixed manufacturing overhead. This method ensures that all manufacturing costs are accounted for in the cost of each unit produced, providing a comprehensive view of production expenses.

Extended information about "Absorption-Cost-Calculator"

Calculate Full Absorption Cost per Unit

Definition: Full absorption costing includes all direct costs and fixed and variable overhead costs associated with manufacturing a product.

Formula: \( \text{Absorption Cost per Unit} = \frac{\text{Total Direct Costs} + \text{Total Overhead Costs}}{\text{Total Units Produced}} \)

Example: \( \text{Absorption Cost per Unit} = \frac{50000 + 20000}{1000} \)

Absorption Cost per Unit Formula

Definition: The absorption cost per unit is calculated by dividing the total costs by the number of units produced.

Formula: \( \text{Absorption Cost per Unit} = \frac{\text{Total Costs}}{\text{Total Units Produced}} \)

Example: \( \text{Absorption Cost per Unit} = \frac{70000}{1500} \)

Full Absorption Cost Formula

Definition: Full absorption cost includes all direct and indirect costs associated with manufacturing a product.

Formula: \( \text{Full Absorption Cost} = \text{Direct Costs} + \text{Fixed Overhead} + \text{Variable Overhead} \)

Example: \( \text{Full Absorption Cost} = 30000 + 15000 + 10000 \)