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Variable Costing
A costing method that includes only variable costs—direct materials, direct labor, and variable manufacturing overhead—in the cost of a unit of product, excluding fixed overhead costs.
Absorption Costing
Absorption Costing is a method of inventory costing that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed manufacturing overhead - in the cost of a product.
Inventory Decreases
A reduction in the quantity of goods or materials held in stock, which can impact production, sales, and the overall financial health of a business.
Variable Costing
An accounting method that includes only variable costs (direct materials, direct labor, and variable manufacturing overhead) in the cost of goods sold and inventory valuation.
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