1. Inventory Costing Absorption costing Direct costing
Costs to use in decision making

2. Absorption Costing All costs of manufacturing included in inventory
Direct materials
Direct labor
Variable overhead
Fixed overhead
Required by generally accepted accounting principles

3. Direct Costing
Only direct costs of manufacturing included in inventory
Direct materials
Direct labor
Variable overhead
Fixed overhead is excluded
Not allowed by generally accepted accounting princiles

4. Costs for Decision Making
Recall relevant costs
Fixed overhead will not vary over production changes
Therefore, direct costing is preferable for decision making