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Figure M-2
-Two vases of different shapes each contain a goldfish. In the position shown, the fish that will feel the greatest pressure is
Variable Costing
An accounting method that only assigns variable costs to inventory, considering fixed costs as period expenses.
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.
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