Direct costing

direct costing
A method where only the variable manufacturing costs are assigned to inventory and the cost of goods sold. Fixed manufacturing costs are viewed as expenses of the period in which they are incurred.

Direct costing
A costing methodology that only assigns direct labor and material costs
to a product, and which does not include any allocated indirect costs (which are all
charged off to the current period).

Direct costing: Synonymous with variable costing. The term is seldom used anymore.
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Direct Costing. Also know as variable costing, a method of calculating costs that involves only raw materials, direct labor and variable overhead.

direct costing
in cost accounting, method that includes only variable costs in the cost of goods sold. The direct costing method may be used for internal purposes only.
Referring Terms: ...

Direct costing is another term for variable costing. Direct costing is a costing method that includes only variable manufactured costs, direct materials, direct labour, and variable manufacturing overhead in the cost of a unit of product.

As a result, internal cost accounting processes in some organizations focus on a direct costing approach. With direct costing, a unit of output will be assigned only its direct cost of production (e.g.

Direct Costing (business term)
Cost-Based Price (in accounting)
Account Analysis (in accounting)
Absorption Costing (business term)
Distress Price (in accounting)
Dual Pricing (in accounting)
Parameter (in accounting) ...

A comparison between absorption and direct costing follows:
Absorption Costing
1. Required for outside reporting 2. Includes fixed overhead as an inventoriable cost ...

See also: Direct cost, Expense, Absorption, Variable cost, Cost accounting