| Variable costing | A costing method that includes only variable manufacturing costs—direct materials, direct labor, and variable manufacturing overhead—in unit product costs. |
| Traceable fixed cost | A fixed cost that is incurred because of the existence of a particular business segment and that would be eliminated if the segment were eliminated. |
| Segment margin | A segment’s contribution margin less its traceable fixed costs. It represents the margin available after a segment has covered all of its own traceable costs |
| Segment | Any part or activity of an organization about which managers seek cost, revenue, or profit data. |
| Common fixed cost | A fixed cost that supports more than one business segment, but is not traceable in whole or in part to any one of the business segments. |
| Absorption costing | A costing method that includes all manufacturing costs—direct materials, direct labor, and both variable and fixed manufacturing overhead—in unit product costs. |
