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Super absorption also called super-full absorption..A tax requirement that certain purchasing and storage costs be allocated to inventory in addition to full manufacturing costs..
Thanks for this Useful question, and thank you VENKITARAMAN KRISHNA for your answer.
It is a method of inventory evaluation methods . And there is no difference between super full absorption and super absorption .
.I am with Mr. Venkitaraman
Absorption costing means that all of the manufacturing costs are absorbed by the units produced. In other words the cost of a finished unit in inventory will include: Direct Materials + Direct Lab-our + Variable and Fixed Manufacturing Overhead.....this is also referred to as Full absorption costing.
When the full absorption on account of certain limitation in estimation (or as on account of a calulated uploading of costs on account external uncertainties) it may result in Over absorption of the Manufacturing Overheads and usually followed the same practice that could be referred as Super Absorption Costing.
Usually overheads are apportioned or allotted to cost units on an estimated basis. But it is quite natural that the overhead so estimated may be different from the amount of overhead actually incurred.
Hence the question of under or over absorption of overhead arises when there is a difference between the amount of overhead absorbed and the amount of overhead incurred.
Over-absorption of overheads means the excess of overheads absorbed over the actual amount of overheads incurred. In other words when the amount absorbed is more than the expenditure incurred due to expenses being less than the estimates it would mean over-absorption of overheads. Usually over-absorption inflates the cost. Over- absorption is also formed as 'over recovery'.
For example the overheads recovered are Rs.3,00,000 and the actual production overheads are Rs.2,75,000 then there will be over-absorption of Rs.25,000. (Rs.3,00,000 - Rs.2,75,000). This over absorption could be referred as Super absorption
Absorption costing is the method of costing in which the entire cost of manufacturing a product or providing a service is absorbed in it. The absorption costing method involves the use of total direct costs and overhead costs related to the manufacturing of a product as the cost base.
Absorbed costs and full costs are two separate financial metrics utilized by businesses to determine different corporate costs. Absorbed cost, also commonly known as absorption cost, is a method for appraising the cost of producing a particular product. Full costing relates to the sum of all costs company-wide.
Agreed with the answers to the Masters
AGREE WITH MR MOATZ & MR VENKITARAMAN ANSWERS
Agree With Sara
Good mr. Venkitaraman
