Traditional Culture Encyclopedia - Traditional festivals - Does absorption cost method meet the requirements of traditional cost concept?
Does absorption cost method meet the requirements of traditional cost concept?
(1) The product cost under the absorption cost method conforms to the traditional concept of cost, while the product cost under the variable cost method does not conform to the traditional concept of cost.
That is, cost, as a kind of resource consumption, is the price paid by enterprises to obtain certain economic benefits, and finally it is compensated from the income of enterprises. In the case of a certain income, the lower the salary cost, the higher the economic benefit of the enterprise.
(2) The absorption cost method makes people pay more attention to production and can stimulate production.
(3) It is more in line with the "causal matching" in the matching principle. Because the cost of producing products, whether it is direct labor, direct materials or manufacturing expenses, must be collected into the products and deducted from the income at one time when the products are sold.
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