Chapter 6: Variable Costing
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FlashcardsAbsorption Costing
The product costing method that assigns direct materials, direct labor, variable manufacturing overhead, and fixed manufacturing overhead to products. Required by GAAP for external reporting.
Variable Costing
The product costing method that assigns only variable manufacturing costs to products: direct materials, direct labor, and variable manufacturing overhead. Used for internal reporting.
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4 Terms
Absorption Costing
The product costing method that assigns direct materials, direct labor, variable manufacturing overhead, and fixed manufacturing overhead to products. Required by GAAP for external reporting.
Variable Costing
The product costing method that assigns only variable manufacturing costs to products: direct materials, direct labor, and variable manufacturing overhead. Used for internal reporting.
Business Segment
An identifiable part of the company for which financial information is available.
Dashboard
A visual display of data that can be used to answer a variety of questions.