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Absorption Costing
A financial approach that incorporates every aspect of manufacturing expenses, such as direct materials, direct labor, and all variable and fixed overhead costs, into the price of a product.
Variable Costing
An accounting methodology that assigns only variable costs to inventory, treating fixed costs as expenses of the period.
Operating Income
Refers to the profit realized from a business's core operating activities, excluding deductions of interest and taxes.
Absorption Costing
Absorption costing is an accounting method that includes all manufacturing costs (both variable and fixed) in the cost of a product.
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