Chapter 20: Absorption Costing versus Variable Costing Textbook Questions 1. Define the following terms: a. Manufacturing Margin b. Contribution Margin 2. List the components of product costs for: a. Absorption Costing b. Variable Costing 3. Explain the primary difference between the Absorption Costing Income Statement and the Variable Costing Income Statement. 4. Explain why a company should use the Variable Costing Income Statement for internal decisions, such as estimating and paying bonuses