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ExamplesDirectCostsFixed & indirect:e.g., Tesla’s battery R&D -Fixed: R&D spending is pre-committed, doesn’t change with # cars-Indirect: R&D benefits all Tesla modelsVariable & direct: e.g., iPhone components-Direct: we know how many screens an iPhone needs-Variable:making one more iPhone requires one more screen Variable & indirect:e.g., machine power of plant that makes several car types-Variable: producing one car less leads to less power usage-Indirect: electricity costs are metered to plant, not to product lineFixedCostsIndirectCostsVariableCostsDirect & fixed:e.g., Marketing for Samsung Note7-Direct:advertisements for Note7 only, not for Samsung Galaxy-Fixed: spending is pre-committed, doesn’t change with # phonesCosts13
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