Absorption

In logistics, absorption refers to the process of incorporating or assimilating costs, expenses, or charges into the overall cost structure of a business or operation. It involves allocating various indirect costs, such as overhead expenses, administrative costs, transportation charges, and warehousing costs, to the individual products or services being produced or delivered.  

Absorption costing helps determine the true cost of producing or delivering goods or services by considering both direct and indirect costs. This information aids in pricing decisions, evaluating profitability, and understanding the financial performance of logistics operations.