The main characteristics of variable costing are as follows :
(1) All the costs like production , administration, selling and distribution costs are classified into fixed and variable cost.
(2) Variable costs are charged to production cost. Fixed costs are not charged to production costs .Rather, it is charged to contribution margin.
(3) All the fixed costs are taken as periodical cost and it is charged to the profit and loss account of that year when it occurred.
(4) Finished goods and work in progress are valued by taking variable manufacturing cost only.
(5) It has its own method of calculation of profit . The profit is determined by deducting total fixed cost from contribution margin . The contribution margin is ascertained by deducting total variable cost from sales .
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