Explore BrainMass

Variable Costing and Violation of the Matching Principle

A brief three or four sentences on:

Under variable costing, all fixed costs (including fixed product costs) are expensed in the period during which they are incurred (i.e. fixed product costs won't be part of the cost of goods sold). If fixed costs must be incurred during a given period, shouldn't they be expensed during that period? Does variable costing violate the matching principle?

Solution Preview

No, the variable costing does not violate the matching principle. Under the matching principle, the expenses and the corresponding revenue generated must be matched for the same accounting period. The way we should ...

Solution Summary

This solution of 146 words explains why variable costing does not violate the matching principle with examples.