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Variable Costing
An accounting method that includes only variable manufacturing costs—direct materials, direct labor, and variable manufacturing overhead—in the cost of goods sold.
Operating Income
Earnings from a company's primary business activities, excluding revenues and expenses from investments or other non-operational sources.
Variable Costing
An accounting method that only allocates variable costs to inventory, treating fixed costs as expenses of the period.
Absorption Costing
A method of costing that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed manufacturing overhead - in the cost of a product.
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