Learn the basics of accounting on how to use several kinds of accounting methods to define the cost of product and how it can be applied to profitability and overhead factors.
Assessing the cost of goods is beneficial to profitability examination. In the production environment, many variables will be involved in the production of the final product. This article emphasizes on the two most general methods of cost accounting to determine the final product cost. It also emphasizes on applying the costing methods to the profitability of business.
[...] Variable Costing Method in Manufacturing Accounting Different from absorption costing which always consider all manufacturing cost related to inventory value, the variable costing method never consider fixed costs related to the production of final product. Only expenses that are related to finished-manufacturing product, materials as well as variable and labor manufacturing overhead cost are figured out into the unit cost determining. Fixed costs are also not figured out into the finished product expense if using variable costing method. Profitability Factors Variable Costing vs. Absorption Costing The use of variable costing versus absorption costing will give different impacts on gross profit for the finished [...]
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