20.2.1 - Based on Nature/Elements
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Practice Questions
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Define direct costs with an example.
💡 Hint: What costs can be counted directly to a product?
What are indirect costs?
💡 Hint: Think of costs that keep the business running but don't apply to one specific product.
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Interactive Quizzes
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What are direct costs?
💡 Hint: Think of costs that directly impact production.
Indirect costs can be directly traced to a specific product.
💡 Hint: Remember what indirect means?
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Challenge Problems
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A company needs to calculate its total production costs. Direct costs total ₹1,00,000, and the indirect costs total ₹50,000. What percentage of the total costs are direct costs?
💡 Hint: Think about calculating the proportion of total costs that are direct.
Analyze the effects of treating a fixed cost as a variable cost in terms of budgeting inaccuracies.
💡 Hint: Ponder the nature of fixed costs in review of budgeting.
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