1. What is the primary difference between variable costing and absorption costing? Why would managers prefer variable costing over absorption costing?

2. How are service companies similar or different from manufacturing companies in using ABC (activity based) costing?

3. How would a knowledge of cost behavior patterns be of help to a manager in analyzing the cost structure of a business firm?

4. Is there really a need to segregate variable and fixed components from mixed costs? Why or why not?

5. Explain how a manager can use CVP analysis to make decisions regarding changes in operations or pricing structure.