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Absorption Income vs Contribution Margin Income1. What is the difference in calculation between the
absorption costing and variable costing approaches?2. Can you give specific benefits to be derived from using
the information from computing gross profit on sales as opposed to contribution
margin?3. Is net income always going to be the same regardless of
the accounting approach?4. Why don’t we use the contribution margin format for
external reporting?
5. Which income statement is classified by function, and
which one is classified by behavior?