Features Of Variable Costing System
1. Variable costing differentiates the manufacturing overheads into fixed and variable. The variable costs are treated as the product cost and fixed costs are treated as period cost.
2. Variable costing does not show differences in average unit cost of production with the fluctuation of output.
3. Unit cost of production decreases with increase in output due ti constant level of fixed cost.
4. Separate of mixed cost into fixed and variable proportion.
5. Variable costing helps in decision making procedures providing necessary informations and data.
The fixed cost such as rent, depreciation, salary etc. are incurred even if there is no production. So, they are not considered product cost and are treated as period cost. Hence fixed costs are treated as expenses of the period. They are not transferable to next period as such they are not included in inventories.
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