Question

Administrative expenses, all fixed per unit what is the inventoriable cost per unit using variable costing?

Answer 1

Electricity consumed in the manufacturing process is inventoriable cost per unit using variable costing.

Variable costing is that concept which is  used in managerial and cost accounting. In this type of costing the fixed manufacturing overhead is excluded from the product-cost of production.

The method contrasts with absorption costing, in which the fixed manufacturing overheads are allocated to products which are  produced. In accounting frameworks such as GAAP and IFRS, variable costing cannot be used in financial reporting.

Although accounting frameworks such as GAAP and IFRS prohibits the use of variable costing in financial reporting, this costing method is commonly used by managers.

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