Practise distinguishing fixed, variable, direct and indirect costs and evaluating why accurate classification and measurement matter for pricing, profit and start-up decisions.
Define the term direct cost.
Define the term direct cost.
Indicative content
Responses may include:
AO1 Knowledge and understanding
Clear understanding 2 marks
- Costs that can be clearly identified/connected/directly linked with each unit of production and can be allocated to a cost centre.
Partial understanding 1 mark
- Expenses related to a product or service
- Related to producing a good
- Cost directly related to a cost centre
Accept all valid responses.