(4 marks) You are planning to open a bakery. You expect to build your business by offering high-value items at low introductory prices. You are aware that your prices must cover your variable costs in the short term, and preferably some of your fixed costs.

You have identified the following costs. Classify each as a direct cost or as an indirect cost and briefly explain your reasoning.

Cost Classification: Reason

Ad in the newspaper

Sugar

Cake boxes

Cleaning Services