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Absorption Costing
is an accounting method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed manufacturing overhead - in the cost of a product.
Fixed Manufacturing Overhead
Costs related to manufacturing that do not vary with the level of production, such as rent, salaries, and utility costs for the factory.
Absorption Costing
An accounting method that includes all manufacturing costs (direct materials, direct labor, and both variable and fixed overhead) as part of the cost base of a product.
Variable Costing
An accounting method that includes only variable production costs in product costs and treats fixed overheads as period costs.
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