Variable costing is called marginal costing while direct costing is separate concept.
Manufacturing companies use job costing.
variable costing
GAAP does NOT preclude use of variable costing for external financial reports. The only place the literature addresses this question is in ARB (Accounting Research Bulletin #4) which states that the exclusion of all overhead from inventory is unacceptable. Variable costing does not attempt to exclude overhead associated with the production of product, i.e. variable overhead. But it does exclude the cost of providing productive capacity. It is odd that in its discussion of the current standard for segment reporting that the FASB said that external users of financial information should received data prepared on a basis consistent with that used by management for decision making. Since it is widely accepted that variable costing is useful to management, can this statement by the FASB be consider an endorsement of variable costing in the financial statements of companies which use it internally?
the comanies that use the ABC system.
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full absorption costing
Variable costing is called marginal costing while direct costing is separate concept.
Manufacturing companies use job costing.
Following type of companies1) Those who want to perform better2) Those who want to be competitiveWhat specific types of companies would be better served with variable costing as opposed to absorption costing? Why?
variable costing
'''Direct Costing'''
GAAP does NOT preclude use of variable costing for external financial reports. The only place the literature addresses this question is in ARB (Accounting Research Bulletin #4) which states that the exclusion of all overhead from inventory is unacceptable. Variable costing does not attempt to exclude overhead associated with the production of product, i.e. variable overhead. But it does exclude the cost of providing productive capacity. It is odd that in its discussion of the current standard for segment reporting that the FASB said that external users of financial information should received data prepared on a basis consistent with that used by management for decision making. Since it is widely accepted that variable costing is useful to management, can this statement by the FASB be consider an endorsement of variable costing in the financial statements of companies which use it internally?
the comanies that use the ABC system.
VARIABLE COSTING VERSUS ABSORPTION COSTINGAbsorption costing applies all manufacturing overhead to production costs while they flow through Work-in-Process Inventory, Finished-Goods Inventory and expenses on the income statement while Variable Costing only applies variable manufacturing overhead.Fixed manufacturing overhead is expensed immediately as it is incurred under variable costing while it is inventoried until the accounting period during which the manufactured goods are sold under absorption costing.
marginal costing is also known as contribution costing. its a costing method that's includes only a variable cost of a product no attempt is made to allocate or appropriate fixed costs to cost centers. the setting of prices is basically based on the variable costs of making a product. if the prices are set above this unit cost then each item sold will make a condition to fixed costs. on the other hand absorption costing or full costing is an approach to the costing of products that allocated all costs of production to cost centers. The aim is to ensure that all business costs are covered.
sales