The process of charging overheads to individual products or jobs is called absorption. This method is used to allocate indirect costs to specific products or jobs in order to determine their total cost.

Absorption costing is a widely used method in cost accounting that ensures all costs, including both direct and indirect costs, are allocated to the products or jobs being produced. This allows for a more accurate calculation of the total cost of production and helps in determining the appropriate selling price for each product or job.

The process of absorption involves several steps, which are as follows:

1. Identification of overhead costs: The first step is to identify all the indirect costs incurred in the production process. These costs can include rent, utilities, depreciation, insurance, and other overhead expenses.

2. Classification of overhead costs: Once the overhead costs are identified, they need to be classified into different categories based on their nature and usage. For example, costs related to production machinery may be classified as machinery overhead costs.

3. Allocation of overhead costs: After classifying the overhead costs, the next step is to allocate them to the products or jobs. This is done based on a predetermined allocation base, such as direct labor hours, machine hours, or production units. The allocation base should be chosen in a way that it reflects the actual usage of the overhead resources by each product or job.

4. Calculation of absorption rate: The absorption rate is calculated by dividing the total overhead costs by the total allocation base. This rate is then used to allocate the overhead costs to individual products or jobs.

5. Charging overhead costs: Finally, the overhead costs are charged or absorbed to the products or jobs based on their usage of the allocation base. This is done by multiplying the absorption rate by the actual usage of the allocation base by each product or job.

By using absorption costing, companies can ensure that all costs, including overheads, are considered when determining the cost of their products or jobs. This helps in making informed decisions regarding pricing, profitability analysis, and resource allocation.