ACCA memo (2）

Target Costing: Setting a cost by subtracting a desired profit margin from a competitive market price.

Absorption Costing(full costing): sometimes called “full costing,” is a managerial accounting method for capturing all costs associated with manufacturing a particular product. The direct and indirect costs, such as direct materials, direct labor, rent, and insurance, are accounted for by using this method.

Absorption costing differs from variable costing because it allocates fixed overhead costs to each unit of a product produced in the period.
Absorption costing allocates fixed overhead costs to a product whether or not it was sold in the period.
This type of costing method means that more cost is included in the ending inventory, which is carried over into the next period as an asset on the balance sheet.
Because more expenses are included in ending inventory, expenses on the income statement are lower when using absorption costing.

将某会计期间内发生的固定成本除以计划产量再乘以销售量，得出单位产品的固定成本，再加上单位变动成本，算出单位产品的总成本. (全部成本法）是一种用以对存货进行估价以及计算全部生产成本的会计模型，主要包括直接原料、直接人工、变动及固定费用等。
Advantage -the main advantage of absorption costing is that it complies with generally accepted accounting principles (GAAP), which are required by the Internal Revenue Service (IRS). Furthermore, it takes into account all of the costs of production (including fixed costs), not just the direct costs, and more accurately tracks profit during an accounting period.
优点：
因为这种方法将固定生产成本包含在产品成本中，所以，产量越大，单位固定生产成本越低，于是整个单位产品成本也随着降低了。这就会大大刺激企业提高产品生产的积极性。
Shortage - The main disadvantage of absorption costing is that it can inflate a company’s profitability during a given accounting period, as all fixed costs are not deducted from revenues unless all of the company’s manufactured products are sold. Additionally, it is not helpful for analysis designed to improve operational and financial efficiency or for comparing product lines.
缺点：
1．采用全部成本法计算出来的单位产品成本不仅不能反映生产部门的真实业绩，反而掩盖或夸大了他们的生产实绩。
2．采用全部成本法会使管理人员盲目追求产量，生产社会不需要的产品。
3．采用全部成本法，不利于进行预测分析、参与决策、编制弹性预算等。
4．采用全部成本法，对于固定制造费用往往需要经过很繁重的分配手续摊入产品成本。