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Direct and overhead costs

  • 15-03-2014 04:20PM
    #1
    Landon Prandon
    Registered Users, Registered Users 2 Posts: 1 ✭


    Hello Guys,

    I had this question in my last midterm and it confused me. Unfortunately, my doctor didn't explain that part well.


    A wasterwater treatment plant for the greater cairo area is operated and managed by several engineers and technicians costing about L.E 3.5 million in annual salaries, benefits, and adminstration. Chemicals and energy are required to treat the wastewater and their consumption and costs depend on the varying amount of treated wastewater in cubic meters. Even though the plant cost exceeded L.E 240 million to construct 10 years ago, the plant will be expanded this year to increase its capacity at a capital cost of L.E 30 million. Please classify the given costs in the following categories.

    Overheat: ??
    Direct: ??

    The answer could be a number or words

    for example the variable cost will be the cost of the chemicals and energy while the fixed cost will be the 3.5 million LE

    But I have trouble regarding determining the overhead and direct costs


    Thanks in advance


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