Under variable costing,only costs that change in total with changes in production levels are included in product costs.

Variable Costing

An accounting method that includes only variable production costs (direct materials, direct labor, and variable manufacturing overhead) in product costs and treats fixed manufacturing overhead as a period expense.

Production Levels

Production levels pertain to the quantity of goods or services produced over a specified period, directly influencing a company's inventory and supply chain.

Product Costs

Costs that are directly associated with the production of goods, including direct labor, direct materials, and manufacturing overhead.