Introduction to 1b: Direct versus Indirect Costs

This lesson discusses the segregation of costs into the mutually exclusive categories of direct and indirect. To do so, you must have a very good understanding of the desired cost object.

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Learning Objectives

After completing this lesson, you should be able to

• classify costs as direct or indirect with respect to a particular cost object.

Be aware that the distinction between direct and indirect costs is fundamental and is used throughout the study of cost or managerial accounting.

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