As two calculation methods of enterprise accounting management cost, absorption costing and variable cost method have their own advantages and disadvantages and applicable conditions. Starting with the characteristics and advantages and disadvantages of absorption costing and variable cost method, this paper focuses on the advantages and disadvantages of variable cost method, as well as the comparison and theoretical demonstration of two cost methods. This paper also discusses the related problems of the two cost methods, and introduces the changing law of operating profit rate under absorption costing and the possibility of changing operating profit rate under the two cost methods.

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