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Costs can be categorized in the following ways: Actual vs. budgeted cost

Full cost vs. direct cost

Fixed vs. variable vs. mixed costs

Relevant vs. irrelevant costs

Product vs. period

Direct vs. indirect

  1. Discuss the following questions: Why is it important for a company to know the categorization of each cost? 
  2. How can this information be used in decision making?
  3. Provide an example of each of the cost categorizations above.
  4. Discuss the following questions:Why is it important for a company to know the categorization of each cost? 
  5. How can this information be used in decision making?
  6. Provide an example of each of the cost categorizations above.

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