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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 of a product.
Variable Production Costs
Costs that change in direct proportion to changes in the level of production, such as raw materials and hourly labor.
Fixed Production Costs
Expenses that do not change with the level of production or sales over a short period, such as rent, salaries, and insurance, ensuring stability in production costs despite output variations.
Net Income
The total profit of a company after accounting for all costs and expenses, including taxes, interest, and depreciation.
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