Question

Explain the difference between directly allocable variable costs and not-directly allocable variable costs.

Answer 1

Answer:

Direct costs are expenses that can be directly traced to a product, while variable costs vary with the level of production output.

Answer 2

Answer:

Direct costs are expenses that can be directly traced to a product, while variable costs vary with the level of production output.

Indirect cost, on the other hand, is incurred to provide multiple benefits to the business at large. Direct cost is also labeled as the variable cost since it changes as per the unit consumed/produced.

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