A method of product costing in which both variable and fixed manufacturing overhead are included in the product costs that flow through the manufacturing accounts (i.e., Work-in-Process Inventory, Finished-Goods Inventory, and Cost of Goods Sold).
throughput costing
A product-costing system that assigns only the unit-level spending for direct costs as the cost of products or services.
variable costing (or direct costing)
A method of product costing in which only variable manufacturing overhead is included as a product cost that flows through the manufacturing accounts (i.e., Work-in-Process Inventory, Finished-Goods Inventory, and Cost of Goods Sold). Fixed manufacturing overhead is treated as a period cost.
