Variable Costing Managers frequently use variable costing for internal purposes for taking decision making. The cost of goods manufactured includes direct materials, direct labor, and variable factory overhead . Fixed factory overhead treated as period (fixed) expense. To Explain: The reason why the service companies use different activity bases than manufacturing companies to classify fixed and variable costs.

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Chapter 20, Problem 20.11EX

To determine

Variable Costing

Managers frequently use variable costing for internal purposes for taking decision making. The cost of goods manufactured includes direct materials, direct labor, and variable factory overhead. Fixed factory overhead treated as period (fixed) expense.

To Explain: The reason why the service companies use different activity bases than manufacturing companies to classify fixed and variable costs.

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