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What is Costing Methods: Variable vs. Absorption about?

Variable costing is preferred for internal use by managers because it focuses on contribution margin, while absorption costing allocates fixed costs to each unit and obscures the effect of production volume on profits. Variable costing is not used for external reporting because accounting standards require the allocation of fixed costs. The major differences are that variable costing treats fixed costs as period costs while absorption costing allocates fixed costs to inventory and cost of goods sold. Absorp

Author

Janica Berba

Language

EN