Asked by kirston seldon on Apr 25, 2024
Under absorption costing,fixed manufacturing overhead is expensed at the time the units are produced.Under variable costing,fixed manufacturing overhead is expensed at the time the units are sold.
Absorption Costing
A method of product costing that incorporates all manufacturing costs, including both fixed and variable costs, in the price of a product.
Variable Costing
An accounting method that charges only variable costs to cost of goods sold and reports fixed costs separately as period costs.
Fixed Manufacturing Overhead
Costs associated with production that do not vary with the level of output, such as salaries of managers and rent for factory buildings.
- Comprehend the fundamental distinctions between absorption costing and variable costing.
Learning Objectives
- Comprehend the fundamental distinctions between absorption costing and variable costing.
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