Variable Costing for Management AnalysisWarren / Reeve / DuchacExercise 20-1 Exercise 20-2 Exercise 20-3 Exercise 20-18 Problem 20-1A Problem 20-2B |
Under variable costing system, product and period costs are divided into two groups: variable and fixed costs. Variable costing approach treats all variable costs as inventory costs and all fixed costs as period costs.
Absorption Costing
Inventory costs
- Direct materials
- Direct labor
- Variable overhead
- Fixed overhead
- SG&A expenses
Variable Costing
Inventory costs
- Direct materials
- Direct labor
- Variable overhead
- Variable SG&A expenses
Period costs (expensed when incurred)
- Fixed overhead
- Fixed SG&A expenses
