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Absorption Costing
A bookkeeping approach that incorporates every manufacturing expense, both steady and fluctuating, into the product's total cost.
Net Operating Income
The profit generated from a company's everyday business operations, excluding expenses and taxes.
Fixed Manufacturing Overhead
The total of all costs that remain constant regardless of the level of production, including expenses such as rent, utilities, and salaries of permanent staff in a manufacturing setting.
Variable Costing
An accounting method that only includes variable production costs (direct materials, direct labor, and variable manufacturing overhead) in product costs, excluding fixed overhead costs.
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