What is stock-costing method, what are the two methods of doing so and how do they impact profits?

1. Variable costing: All variable manufacturing costs are assigned to production, and they become part of the unit cost. This highlights the distinction between variable and fixed costs, hence focusing more on the behavior of costs and the contribution margin. 2. Absorption costing: Absorption costing enables a manager to increase operating profit in a specific period by increasing the production schedule, even if there is no customer demand for the additional production. This highlights the distinction between manufacturing and non-manufacturing costs. Hence, the focus is on the gross margin, distinction made by the business function.