What is full costing primarily concerned with?

Full costing, also known as absorption costing, is primarily focused on the combination of both direct and allocated indirect costs in the determination of product cost. This approach encompasses all costs associated with manufacturing a product, which includes materials, labor, and both variable and fixed overhead costs.

By integrating these costs, full costing provides a comprehensive view of the expenses incurred in the production process, allowing for a more accurate assessment of product profitability and financial reporting. This method is essential for managerial decision-making, financial analysis, and fulfilling external financial reporting requirements.

The importance of including both direct costs, such as raw materials and direct labor, as well as indirect costs, like utilities and administrative expenses allocated to the production process, means that it offers a holistic picture of the cost structure unlike other approaches that may focus only on specific types of expenses.