Variable Costing Flashcards
1
Q
What is another name for variable costing?
A
Marginal costing
2
Q
What is variable costing?
A
traces all variable costs to products and treats manufacturing and non manufacturing overheads as period costs
3
Q
What are the advantages of variable costing?
A
provides more detailed information for decision making.
removes from profit the effect of inventory changes.
avoids fixed overheads being capitalised in unsaleable stocks.
easier to estimate the profitability of cost objects.
4
Q
What costs does variable costing include in product costs?
A
direct materials
direct labour
variable manufacturing overhead
5
Q
what is the contribution?
A
when all product and variable costs are taken away from sales to give you the contribution.
