Final answer:
Costing method in accounting refers to the approach used to determine the cost of producing goods or providing services. Popular costing methods include absorption costing and variable costing.
Step-by-step explanation:
The costing method in accounting refers to the approach used to determine the cost of producing goods or providing services. There are various costing methods, such as the absorption costing method, variable costing method, and activity-based costing (ABC) method.
In absorption costing, both fixed and variable costs are allocated to each unit of production. This method is commonly used for external financial reporting purposes, as it includes all costs incurred in the production process.
On the other hand, variable costing only considers the variable costs directly attributable to producing each unit of output. Fixed costs are treated as period expenses and are not assigned to individual units. This method is useful for internal management decision-making.