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Variable Costing: A Tool For Management
Variable Costing: A Tool For Management
5
Variable Costing:
A Tool for Management
Overview of Absorption and
Variable Costing
Absorption Variable
Costing Costing
Direct materials
Direct labor Product costs
Product costs Variable mfg. overhead
No change in Harvey’s
cost structure.
All fixed
manufacturing
overhead is
expensed.
Absorption Variable
Costing Costing
Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 2000
Variable versus Absorption Costing
Depreciation, taxes, These are capacity
insurance and salaries costs and will be
are just as essential to incurred if nothing
products as variable costs. is produced.
Absorption Variable
Costing Costing
Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 2000
Variable versus Absorption Costing
I guess we won’t be
solving this controversy
today!
Production
tends to equal
sales . . .