Glossary definition

What is product costing?

A form of accounting which focuses on the actual costs of producing a product. Actual costs are most often compared to standard costs, thereby producing a variance which must be justified by purchasing and manufacturing. Where standard costing is not used, actual product costs (usually “lot costs”) flow into the cost of goods sold (COGS), thereby flowing such variances into the financials in a different manner than with standard costing.

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