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Variable Costing

   

Definition: Variable Costing is a costing method also known as Direct Costing or Marginal Costing that only includes variable manufacturing costs (direct materials, direct labour, and variable overhead) in the product cost. Fixed overhead costs are treated as period expenses, and they are expensed immediately in the accounting period in which they are incurred. Fixed overhead does not become part of inventory and does not affect the COGS.


   
   
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