Under both variable costing and absorption costing, all manufacturing costs are inventoriable costs.
Under both variable costing and absorption costing, all non-manufacturing costs in the value chain (e.g. R&D, marketing), whether fixed or variable, are considered inventoriable costs.
Managers can increase operating profit in a specific period by increasing production - even if there is no customer demand for the additional production. This can thereby provide an inaccurate overview for shareholders. This problem occurs with which type of costing?
Absorption costing
Variable costing
Under variable costing, only variable direct materials, direct manufacturing labour and manufacturing overhead go into WIP, FG and COGS.
Supervisor salary is a fixed cost. How is treated under both costing types?
Under absorption costing, it would be included in the product cost. Whereas under variable costing, it will not be.
Under absorption costing, it would be not be included in the product cost. Whereas under variable costing, it will be.
Under both, it will be included in the product cost as fixed OH is treated the same.
Under both, it will not be included in the product cost as fixed OH is treated the same.
