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Absorption costing A costing method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed manufacturing overhead - in the cost of a unit of product. Absorption costing is also referred to as the full cost method. (p. 284) Direct costing Another term for variable costing. See Variable costing. (p. 284) Fixed manufacturing overhead cost deferred in inventory The portion of the fixed manufacturing overhead cost of a period that goes into inventory under the absorption costing method as a result of production exceeding sales. (p. 286) Fixed manufacturing overhead cost released from inventory The portion of the fixed manufacturing overhead cost of a prior period that becomes an expense of the current period under the absorption costing method as a result of sales exceeding production. (p. 292) Full cost See Absorption costing. (p. 284) Marginal costing Another term for variable costing. See Variable costing. (p. 284) Variable costing A costing method that includes only variable manufacturing costs - direct materials, direct labor, and variable manufacturing overhead - in the cost of a unit of product. Also see Marginal costing or Direct costing. (p. 284) |
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