Absorption versus variable costing will only be a factor for companies that expense costs of goods sold (COGS) on their income statements. Any company can use both methods for various reasons but ...

Two methods are commonly employed to value inventory -- variable costing and absorption costing. The difference between the two is in their treatment of operational overhead.

Both methods also classify direct materials, direct labor and marginal manufacturing overhead as product costs. However, fixed manufacturing overhead is a product cost under the absorption costing ...

Full costing is a managerial accounting method that describes when all fixed and variable costs are used to compute the total cost per unit.