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Variable Costing - Essay Example

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College
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Finance & Accounting
Pages 5 (1255 words)

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FINANCE AND ACCOUNTING Institution Subject code Basic ideas about cost behavior Cost behavior is mainly divided into three i.e. the fixed, variable and mixed costs. Cost behavior is the change in cost in relation to the level of activity changes…

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Variable Costing

Product cost versus period cost Also known as inventorial costs, product costs are all those costs that are used in the acquisition and production of a product. They include direct labor costs, cost of direct materials and the manufacturing expenditure (Maher et, al 2006). They are normally assigned to an inventory account in the balance sheets and released from the stock as expenditure. Period costs are all the omissions in the product cost normally expensed on the income statement or report in the time of occurrence for example the office rent, administrative expenses and commissions on sale, which are expensed on the income statement during such periods of occurrence (Maher et, al 2006). ...
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