Q: What is meant by the term ‘contribution’ and how would I do an analysis of a table of contribution/sales ratios?

One problem that exists in costing systems is the difficulty of allocating fixed costs to products.

One problem that exists in costing systems is the difficulty of allocating fixed costs to products. This is almost always done arbitrarily and there is an element of distortion, particularly if a number of products are involved. One way round this is to use Marginal or Direct Costing, which divides costs into fixed and variable costs. Fixed costs are not allocated to...

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