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Hello Tutor,
In my textbook, they classified “Machine operator” and “Components bought from other suppliers (such as studs to decorate a sofa)” as direct costs.
But I do not really understand the reasons for these classifications as I thought machine operator is not directly attributable to production and the same with components as they indirectly attribute.
Can you please enlight me on this?
Thank you!
I have no idea what textbook you are using and so I do not know the context of the whole question.
I presume that machines are being used to make whatever they are producing and therefore the cost of the person operating the machines is a cost of production. Any materials used in the production (which presumably the studs are) are also a cost of production.
Thank you tutor. In my textbook, they do not give the context, but just ask readers to classify these costs into direct or indirect.
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