Variable costing is a cost concept of managerial accounting. In the production period of the product, manufacturing overhead is incurred. This resolves the issue regarding absorption costing in which as production rises income also rises. Copy the link given below and paste it in new browser window to get more information on Variable Costing:- http://www.transtutors.com/homework-help/accounting/variable-costing.aspx

1. Management
Accounting cost method

2.  Basis of decision making
 Basis of CVP Analysis
 Facilitates calculation of break even point
 Facilitates framing of flexible budgets

3. Variable
Costing
• Not
accepted by
GAAP
• Direct costs
are included
Absorption
Costing
• Accepted by
GAAP
• All costs are
included

4. Changes with unit
change in
production
Do not change
with unit change
in production
Relevant for
decision making
Irrelevant for
decision making

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