Asked by Devyn Murray on May 13, 2024
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Under variable costing,product costs consist of direct labor,direct materials,and fixed overhead.
Variable Costing
An accounting method that includes only variable production costs—direct materials, direct labor, and variable manufacturing overhead—in the cost of goods sold, treating fixed manufacturing costs as period costs.
Fixed Overhead
The set of expenses that do not vary with the level of production or sales, such as rent, salaries, and insurance.
Product Costs
Costs directly associated with the creation of a product, including materials, labor, and manufacturing overhead.
- Clarify the contrasts between variable and absorption costing in relation to their approaches to cost treatment and income reporting.
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Learning Objectives
- Clarify the contrasts between variable and absorption costing in relation to their approaches to cost treatment and income reporting.
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