[Anonymous]

Are selling and administrative expense variable expense? Under Variable costing method, only variable expense are considered product cost, however, I had a problem when it states selling and administrative expense ARE variable expense and the other states that it is not. Can anyone please explaint it to me?

[Texas CPA]

Selling and admin can be variable costs. Commissions would be an example of variable costs. Higher sales = higher commissions. If you paid your sales staff straight salary, then they would be fixed. Higher sales might mean higher paperwork and the need for temp staff to handle the volume.

Those costs may be variable but they are not product costs.

Reg - Passed 82 Nov 2012 - Becker
Aud - Passed 86 May 2013 - Becker
BEC - Passed 88 Aug 2013 - Becker
FAR - Passed 88 Nov 2013 - Becker

https://www.becker.com/cpa-review

Texas CPA

[Texas CPA]

Selling and admin can be variable costs. Commissions would be an example of variable costs. Higher sales = higher commissions. If you paid your sales staff straight salary, then they would be fixed. Higher sales might mean higher paperwork and the need for temp staff to handle the volume.

Those costs may be variable but they are not product costs.

Reg - Passed 82 Nov 2012 - Becker
Aud - Passed 86 May 2013 - Becker
BEC - Passed 88 Aug 2013 - Becker
FAR - Passed 88 Nov 2013 - Becker

https://www.becker.com/cpa-review

Texas CPA

[Author]

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