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    Rao Ehsan
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    Direct costs include materials, labor, and other expenses directly tied to production like rent and rates. Indirect costs are expenses not directly tied to production but still necessary like administrative overhead. Together direct and indirect costs make up the total cost of a cost unit for inventory valuation and calculating profit.

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    Direct costs include materials, labor, and other expenses directly tied to production like rent and rates. Indirect costs are expenses not directly tied to production but still necessary like administrative overhead. Together direct and indirect costs make up the total cost of a cost unit for inventory valuation and calculating profit.

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    5 views1 page

    Cost Element

    Uploaded by

    Rao Ehsan
    Direct costs include materials, labor, and other expenses directly tied to production like rent and rates. Indirect costs are expenses not directly tied to production but still necessary like administrative overhead. Together direct and indirect costs make up the total cost of a cost unit for inventory valuation and calculating profit.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    Cost Classification For Inventory Valuation And Profit

    Cost Elements:
    The total cost of a cost unit is made up of the following three elements of cost.

    1. Materials
    2. Labour
    3. Other expenses (such as rent and rates, interest charges and so on)

    Cost elements can be classified as direct costs or indirect costs.

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