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Advantages of using absorption costing system

Briefly illustrate out the advantages of using absorption costing system for computing the total cost of product.

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The advantages of the absorption costing are that it gives a means of sharing total overheads of a business in manufacturing sector over the several production cost centers and the overheads for the specific production cost centre over the several products passing through it. It offers production overheads to be gathered or apportioned to the cost centers on fair basis and absorbed in the cost unit using an appropriate using the overhead absorption rate. Non-production overheads are absorbed in the cost unit through adding the percentage based upon the proportion of non-production overheads to total production cost.

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