Under direct costing, all fixed costs are expensed in the period incurred, including fixed selling and administrative costs.

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Direct costing, also known as variable costing, only considers variable costs as direct expenses of a product or service. Fixed costs, such as selling and administrative expenses, are not included in the cost of goods sold but are expensed in the period incurred. This is different from absorption costing, where fixed costs are allocated to products as overhead expenses.

Under Direct Costing, All Fixed Costs Are Expensed in the Period