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Essay text:
The potential customer is capable of paying only $10 per 100 brochures. She requires 25000 brochures printed. There is no potential for future business.
Cost Theory
The case provides details of certain kinds of costs as discussed below –
Direct costs – Direct costs can be directly traced to a cost object such as a product or department. They do not have to be allocated to a product, department or any cost object.
Indirect costs – These are not direct costs of the production department or items produced and hence need to be allocated to the department or product. Examples are taxes, administration and security costs...
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