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Methods of costing - short answer questions


Question 1

Define the term 'contribution'.

Question 2

'A firm that makes more than one product does not know what they cost to make, but knows exactly how much profit the firm has made.' Discuss.

Question 3

Explain why contribution is as important to most firms as profit.

Question 4

Analyse the reasons why a firm may sell a product for less than its total cost of production.

Question 5

If you ran a supermarket, discuss how you could use the concept of contribution to maximise your profits.