Question

Q1: What is the difference between contribution margin and gross margin (two sentences maximum)?

Chapter 4 is about accumulating cost using a job order costing system.

Q2: How do you distinguish actual costing from normal costing under a job under a costing system? (3 sentences maximum.)

• Include references to credit any text, video, or other materials that you used as sources (including your textbook).

Answer 1

Ans 1

Gross margin is the amount of money left after subtracting direct costs, while contribution margin measures the profitability of individual products. The contribution margin can be used to examine variable production cost

Ans 2

The difference is in how the overhead is allocated to each item produced. Under actual costing, the overhead allocation rate is calculated based on the most recent actual amount of overhead expense. Under the normal costing method, it is calculated based on the budgeted amount for the whole year.