Critical Thinking Issues Problem #1 In the case, Jordan put together a total cost for the first order of specialty candles by adding up all of the DM, DL, and allocated MOH; in other words, he used the Absorption Cost. This is the method most commonly used in manufacturing because it is the method required by GAAP for financial reporting. However, there are several other methods for allocating costs to a product or order: Variable Manufacturing Cost. This method of tracking costs includes only DM, DL, and the variable portion of MOH. It does not include any fixed manufacturing costs or selling and administrative (S&A) costs. Total Variable Cost. This method of tracking costs includes DM, DL, variable MOH, and variable S&A. However, it still omits fixed costs. Full Cost. This method of tracking costs includes all costs of the business, including fixed and variable S&A costs. Discuss the pros and cons of each of the four costing methods. Which method do you think Wedgewood should use for its new line of specialty candles? Defend your answer. Pros Cons Absorption Costing Variable Manufacturing Costing Total Variable Costing Full Costing