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Question
Cost of sugarcane in making sugar is an example of ______.
Options
Direct
Variable
Indirect
Semi-variable
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Solution
Cost of sugarcane in making sugar is an example of direct.
Explanation:
Sugarcane is a direct material because it becomes an integral part of the finished sugar and can be conveniently traced to production. Direct materials are directly chargeable to the product (and, since they vary with output, are also variable).
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