Topic focus 3 - Variable and absorption costing. After studying this chapter you will be able to understand: What is variable costing? Comparison, jersey fabric product costs, units sold = units produced, units sold UNITS PRODUCED Absorption Costing Variable Costing EFFECTS ON OPERATING INCOME | TOPIC FOCUS ON VARIABLE AND ABSORPTION COSTING WHAT IS VARIABLE COSTING? Product costing approach that includes only variable costs Direct materials Direct labor Variable overhead Fixed overhead is not considered a product cost but is treated as a period cost and expensed as incurred COMPARISON JERSEY FABRIC PRODUCT COSTS Absorption Costing Variable Costing Direct Materials $ $ Direct Labor Variable Overhead Fixed Overhead Total cost per yard $ $ UNITS SOLD = UNITS PRODUCED Absorption Costing Variable Costing UNITS SOLD UNITS PRODUCED Absorption Costing Variable Costing EFFECTS ON OPERATING INCOME | TOPIC FOCUS ON VARIABLE AND ABSORPTION COSTING WHAT IS VARIABLE COSTING? Product costing approach that includes only variable costs Direct materials Direct labor Variable overhead Fixed overhead is not considered a product cost but is treated as a period cost and expensed as incurred COMPARISON JERSEY FABRIC PRODUCT COSTS Absorption Costing Variable Costing Direct Materials $ $ Direct Labor Variable Overhead Fixed Overhead Total cost per yard $ $ UNITS SOLD = UNITS PRODUCED Absorption Costing Variable Costing UNITS SOLD UNITS PRODUCED Absorption Costing Variable Costing EFFECTS ON OPERATING . | TOPIC FOCUS ON VARIABLE AND ABSORPTION COSTING WHAT IS VARIABLE COSTING? Product costing approach that includes only variable costs Direct materials Direct labor Variable overhead Fixed overhead is not considered a product cost but is treated as a period cost and expensed as incurred COMPARISON JERSEY FABRIC PRODUCT COSTS Absorption Costing Variable Costing Direct Materials $ $ Direct Labor Variable Overhead Fixed Overhead Total cost per yard $ $ UNITS SOLD = UNITS PRODUCED Absorption Costing Variable Costing UNITS SOLD UNITS PRODUCED Absorption Costing Variable Costing EFFECTS ON OPERATING INCOME | TOPIC FOCUS ON VARIABLE AND ABSORPTION COSTING WHAT IS VARIABLE COSTING? Product costing approach that includes only variable costs Direct materials Direct labor Variable overhead Fixed overhead is not considered a product cost but is treated as a period cost and expensed as incurred COMPARISON JERSEY FABRIC PRODUCT COSTS Absorption Costing Variable Costing Direct Materials $ $ Direct Labor Variable Overhead Fixed Overhead Total cost per yard $ $ UNITS SOLD = UNITS PRODUCED Absorption Costing Variable Costing UNITS SOLD UNITS PRODUCED Absorption Costing Variable Costing EFFECTS ON OPERATING .
