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There are different cost classifications in business such as direct and indirect costs, manufacturing and non-manufacturing costs, product costs and period costs, variable and fixed costs, differential costs, sunk costs and opportunity costs. You will also learn how to prepare a contribution format income statement as compared to the traditional income statement.
Problem 1: Why is it important to understand the nature of costs?
Problem 2: Provide a situation when knowledge of these different cost concepts matter?
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