ENTREPRENEURIAL PLANNING
FINANCIAL PLANNING AND ANALYSIS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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True
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False
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Either A or B
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None of the above
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Detailed explanation-1: -Raw materials are categorized as direct expenses on a company’s income statement because they contribute directly to the making of a product or delivery of a service. As raw material costs change along with production volumes, they are considered to be variable costs.
Detailed explanation-2: -2 types of direct costs For example, in a bakery, if you make one loaf of bread, it might cost you $3 in flour, yeast and other ingredients. If you make 10 loaves of bread, it might cost $30 in flour, yeast and other ingredients. These costs increase as production increases.
Detailed explanation-3: -Buying inventory or raw materials. Wages spent on making products or delivering services. Lease and energy costs associated directly with production or delivering the work.