So, the dealership can estimate the variable costs for the $400,000 month to be $333,333 (based on 100 cars multiplied by the $3,333.33 variable cost per unit) and the fixed costs to be $66,667.

Under variable costing, your revenue is $80,000, the expense you report for the cost of the goods you sold is $32,000 (4,000 x $8), and you have a $10,000 expense for fixed overhead.

Absorbed cost is an accounting approach used in management that allocates both fixed and variable expenses to the total production cost of a specific product.