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Why is it important that we establish pools of indirect costs –namely, those that cannot be directly associated with a unit orbatch of product, like direct material and direct labor – andallocate them to products to achieve a total cost? How is thisuseful for estimating how much something could be made/sold for andfor evaluating profitability of products / divisions? What are someoptions for doing this and criteria to be utilized in selecting thebest methods?
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