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Why are direct and indirect costs important to management

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Reference no: EM131357219

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Minimum of 450-500 words in length and properly sourced.

Question 1

1. Define direct costs.
2. Define Indirect costs
3. Why are direct and indirect costs important to management?
4. Would you describe your current job today as a direct cost or a indirect cost? Why?
5. Categorize the following as direct or indirect:

a. Managed care marketing expense
b. Real estate taxes
c. Liability insurance
d. Clinic telephone expense
e. Utilities (for the entire facility)
f. Emergency room medical supplies

Question 2

What is break-even analysis and why is it an important element in the discussion of operating leverage? In your response include a discussion on the break-even point.

Compare fixed and variable costs and explain the significance of the difference in making financial decisions. What does contribution margin (CM) mean?

Reference no: EM131357219

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