Final answer:
Another name for absorption costing is full costing. In this method, all manufacturing costs, both fixed and variable, are included in the product's cost. While fixed costs remain constant, variable costs fluctuate with production volume, and production technology encompasses the methods and processes used to produce goods or services.
Step-by-step explanation:
Another name for absorption costing is full costing. In absorption costing, all of the manufacturing costs are absorbed by the units produced. In other words, the total cost of a product includes all the fixed and variable costs associated with its production.
Variable costs are the costs that vary with the production volume, such as labor and raw materials. For example, in a barber shop, the variable cost is the cost of hiring barbers at $80 per barber each day. Fixed costs, on the other hand, remain constant regardless of the production volume. In the barber shop example, the fixed costs include the rent and equipment costs, which amount to $160 per day. Costs like average cost, average variable cost, and marginal cost are calculated on a per-unit basis to determine the cost associated with producing one additional unit.
A production technology refers to the methods and processes used to convert inputs into outputs. It encompasses the equipment, machinery, labor skills, and the overall approach to production, allowing a business to create goods or services.