Absorption costing is a cost accounting method for valuing inventory. Absorption costing includes or absorbs all the costs of manufacturing a product including both fixed and variable costs.That means that all costs including direct, like material costs, and indirect, like overhead costs, are included in the price of inventory.bsorption costing includes or absorbs all the costs of manufacturing a product including both fixed and variable costs. That means that all costs including direct, like material costs, and indirect, like overhead costs, are included in the price of inventory.
Definition. Total amount of income earned annually. Gross annual income represents the amount of money a person earns in one year from all sources before taxes. When preparing an income tax return, the gross annual income figure is the base figure with which to start.
There are many gray areas in both recognition and reporting, but ultimately all earned income from sales transactions falls into gross or net categories. When gross revenue is recorded, all of the income from a sale is accounted for on the income statement. Net revenue is usually reported when there is a commission that needs to be recognized and/or when a supplier receives some of the sales revenue. Gross revenue reporting separates sales and cost of goods sold.