Costing Methods

Absorption Costing: Definition, Features, Advantages, Disadvantages

Absorption costing is a costing method that includes all manufacturing costs — direct materials, direct labor and both variable and fixed manufacturing overhead in the cost of a unit of product. Absorption costing is also referred to as the full cost method. Because absorption costing includes all cost of production as product costs. It is…

Variable Costing: Definition, Features, Advantages, Disadvantages

Variable costing or Direct costing is a costing method that includes only variable manufacturing costs — direct materials, direct labor, and variable manufacturing overhead in the cost of a unit of product. Variable costing is also referred to as direct costing. Under variable costing, only those costs of production that vary directly with output are…