A.
Variable Costing
Managers frequently use variable costing for internal purposes for decision making. The cost of goods manufactured includes direct materials, direct labor, and variable factory
Contribution Margin
Contribution margin is the excess of manufacturing margin above selling and administrative expenses. Contribution margin is calculated by deducting the variable cost from sales or deducting variable selling and administrative expenses from manufacturing margin.
To calculate: The contribution margin ratio forAtlanta/Baltimore route (data from Exercise 20).
B.
To prepare: A table for contribution margin analysis to evaluate management action in may.
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