The Process of Identifying Costs as Direct or Indirect Is

question 133

Short Answer

The process of identifying costs as direct or indirect is referred to as classifying costs by________________ .

Recognize the scarcity of resources and the importance of economizing behavior.

Learn that no good or service is entirely free; every choice involves tradeoffs.

Understand how rational decisions are made by weighing marginal benefits against marginal costs.

Grasp the impact of incentives on individual and economic choices.

---

Definitions:

Contribution Margin

The difference between sales revenue and variable costs, used to cover fixed expenses and provide profit.

Units Sold

The total quantity of products sold within a specific period.

Absorption Costing

An accounting method that includes all of the manufacturing costs in the cost of a product, including both fixed and variable costs.

Production Increase

A situation where a company enhances its output of products due to higher demand, improved efficiencies, or expansion efforts.