Problems 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 absorption costing. This is the method most commonly discussed in textbooks because it is also the method required by GAAP for financial reporting purposes. 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. No fixed manufacturing costs or selling and administrative (S&A) costs are included. Total Variable Cost. This method of tracking costs includes DM, DL, variable MOH, and variable S&A. However, fixed costs are still omitted. Full Cost. This method of tracking costs includes all of the costs of the business, including all 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. (Feel free to use the back of this page to continue your answer.)