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Ace Fertilizer Company: Ethical Cost Allocations And Price Determination

Submitted by • November 1, 2018

Abby has become very skilled at computing the cost of special orders. She fully realizes a special order includes a variety of costs, including direct and indirect costs. Abby knows that proper project cost determination mandates inclusion of all of these costs. to help determine the most profitable special orders and customers, which activities and processes are value-added,and where efforts toward improvements can be made. Abby especially likes this latter approach when assigning indirect costs to special orders. DIRECT COSTS vS. INDIRECT COSTSBREELAND LTD. SpECIAL ORDER Direct costs are those costs that are easily and conveniently assigned to a special order. Major direct costs for Abby are direct materials and direct labor. Direct materials are-those materials that become an integral part of the finished product. Direct labor, sometimes referred to as touch labor, includes the cost of those laborers who directly touch the product while it is being made. The wages of general produc

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Voted by Simon Brooke

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