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The paper helped in gaining an insight into the pros and cons of absorption and variable costing if the firm used cost-based pricing. Moreover, absorption costing is regarded as the approach used for allocating direct manufacturing costs and indirect manufacturing expenses for producing products. Variable costing is a method of assigning variable manufacturing costs to products manufactured. Coca-Cola has used an absorption costing approach for certifying that all the fixed and variable costs are considered when building costs of the products. Absorption costing uses all production costs and complies with GAAP while variable costing does not conform to GAAP and considers only variable costs.