According to the variable cost method, only the fixed cost is included in the explanation period cost.

It is wrong to explain that period cost only includes fixed cost according to variable cost method.

According to the explanation period of variable cost method, the period cost under variable cost method includes sales expenses, management expenses and fixed manufacturing expenses. Variable cost method, also known as direct cost method and marginal costing, is the abbreviation of variable cost calculation, which means that in the process of organizing routine cost calculation, only variable production cost is regarded as the composition of product cost on the premise of cost behavior analysis.

The fixed production cost and non-production cost are regarded as the period cost, and the profit and loss are calculated according to the contribution profit and loss determination procedure. Variable cost method is a new mode designed by management accounting to reform the traditional cost calculation mode of financial accounting. Variable cost means that the total cost changes with the change of business volume.

For example, direct labor and direct materials of enterprises. Variable cost method is to divide the costs incurred in a certain period into variable costs and fixed costs according to their cost characteristics, that is, variable production costs and fixed production costs, and then treat all fixed production costs and non-production costs as period costs.

Operating profit rises and falls with the increase or decrease of sales volume, which is the accounting information that enterprise managers want. It is convenient for cost-volume-profit analysis and sales forecast. The basic theory and steps of variable cost method reveal the internal relationship among cost, business volume and profit. It is conducive to urging enterprise management authorities to pay attention to sales and prevent blind production.