Advantages of Absorption Costing

Inclusion of Fixed Overhead Costs
Fixed overhead costs are included in calculating the product cost as it is believed that fixed overhead costs plays an equal role in the production of a product as variable overhead costs.
External Reporting
Absorption Costing helps in the valuation of stock and preparation of external reports which are useful to the management.
Helps in Calculating Accurate Profit
As absorption costing includes both the fixed and variable overhead costs, it helps in calculating true profit for the unit as fixed overheads are also a part of the product cost, it is not shown as an expense and rather absorbed when the product is sold or is shown as asset in the form of inventory.