What Costs Are Treated as Product Costs Under the Variable

question 51

Essay

What costs are treated as product costs under the variable costing method?

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Definitions:

Additional Manufacturing Overhead

Costs incurred in the manufacturing process that are above the initially budgeted or standard manufacturing overhead costs.

Underapplied

Underapplied refers to a situation where the allocated or estimated costs for a particular period are less than the actual costs incurred.

Overapplied

A situation where the allocated overhead costs for production exceed the actual overhead expenses incurred.

Direct Materials

Basic substances that can be directly linked to the production process of a good.