Before looking at absorption versus variable costing, it's important to understand the difference between direct and indirect costs on the income statement. Direct costs are usually associated ...

ridvan_celik / Getty Images Companies must choose between absorption costing and variable costing in their accounting systems, and there are advantages and disadvantages to either choice.

Jonathan Ponciano is a financial journalist with nearly a decade of experience covering markets, technology, and entrepreneurship. Suzanne is a content marketer, writer, and fact-checker.