- - - Treats fixed selling cost as a period cost. Required by generally accepted accounting principles. Treats fixed manufacturing cost as a period cost. Operating income is impacted by changes in inventory level Generally provides the most useful report for controlling a. Absorption costing only b. Vanable costing only c. Both absorption and variable costing costs. Generally provides the most useful report for setting long-term prices May be used in a manufacturing company. Includes gross profit on the income statement