Asked by Garrett Jones on Jun 18, 2024
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Variable costing treats fixed overhead cost as a period cost.
Variable Costing
A costing method that only includes variable production costs in the cost of goods sold and treats fixed overhead as a period expense.
Fixed Overhead
Expenses that do not vary with the level of production or sales, including rent, salaries, and insurance costs.
Period Cost
Costs that are not directly tied to the production process and are instead expensed in the period they are incurred, such as selling, administrative, and other expenses.
- Point out the divergences in cost treatment and income reporting between absorption costing and variable costing.
Verified Answer
Learning Objectives
- Point out the divergences in cost treatment and income reporting between absorption costing and variable costing.
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