In determining cost of goods sold, two alternate costing concepts can be used: direct costing and variable costing.

Question

Quizplus · Accepted Answer

Direct costing and variable costing are not two alternate concepts for determining the cost of goods sold; rather, direct costing is another term for variable costing, both of which involve assigning only variable manufacturing costs to products. The alternative to variable (or direct) costing is absorption costing, which includes both variable and fixed manufacturing costs in the cost of goods sold.

In Determining Cost of Goods Sold, Two Alternate Costing Concepts