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  • Big corporations product costing methods

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    I am doing a research paper on ExxonMobil and the methods their managers use for product costing. On ExxonMobil's SEC filings, they use Absorption costing because it is mandated by the government. What I am interested in is what costing methods they use for their product costing. Some of those that we are studying are Activity Based Costing (ABC), Relevant Costing, or Standard Costing. Any advice will be appreciated.

    accounting cost-accounting

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    by sbhealey

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    by emerson89

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    Absorption costing refers to the allocation of both direct and indirect costs of manufacturing a product or providing a service. The allocation of costs may be accomplished by various methods including activity-based costing, standard costing, etc. Large, integrated oil and gas companies engaged in upstream, midstream and downstream activities such as ExxonMobil may use a combination of product costing approaches in preparing their financial statements. However, property, plant and equipment depreciation costs are a major factor in inventory costs due to the significant investments required for upstream exploration, midstream transport, and downstream refining. ExxonMobil uses both the unit-of-production method and straight-line method of calculating depreciation costs (you can find details in the inventory and property, plant and equipment notes to consolidated financial statements in their annual filings) which results in a combination of activity-based and standard cost effect on the product costs reflected in their financial statements.

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