BMGT 221 Chapter Notes - Chapter 6: Earnings Before Interest And Taxes, Total Absorption Costing, Fixed Cost
22 Apr 2016
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Chapter 6 variable costing and segment reporting: tools for management. Only those manufacturing costs that vary with output are treated as prouct costs: direct materials, direct labor, variable portion of manufacturing overhead. Fixed manufacturing overhead is not treated as a product cost under this method, expensed in its entirety each period. Cost of unit of procut in inventory or in cost of goods sold under variable costing method does not contain any fixed manufacturing overhead cost. Variable costing is sometimes referred to as direct costing or marginal costing. Treats all manufacturing costs as prouct costs, regardless of whether they"re variable or fixed: direct materials, direct labor, both variable and fixed manufacturing overhead. Abosprotion costing allocates a portion of fixed manufacturing overhead cost to each unit of prodcuct, along with variable manfuacuting cost. Frequently referred to as the full cost method. Never treated as procut costs, regardless of the costing method.
