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Direct Costing | Marginal Costing |
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Variable Costing |
Inventory valuation: Summary of Direct Costing. Abstract |
The Direct Costing method (also: Variable Costing or Marginal costing) is an inventory valuation / costing model that includes only the variable manufacturing costs:
... in the cost of a unit of product. The
entire amount of fixed costs are expenses in the year incurred. Variable Costing is also referred to as the direct costing method or the marginal costing method. Should Fixed Manufacturing Costs be Included in Inventories?
Consequences of using Variable Costing for Profit calculation The difference is important for calculating profit when a beginning and ending inventory levels are different:
T I P : Here you can discuss and learn a lot more about inventory valuation and Variable Costing.
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