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Kamal has a grocery store that was constructed at a cost of $8,000 several years ago. He decided to use the store to sell necessary
Kamal has a grocery store that was constructed at a cost of $8,000 several years ago. He decided to use the store to sell necessary groceries and some household items in his spare time. The store will be depreciated over a 20-year life. In order to prepare his store, Kamal needs to build some shelves and has determined that each shelf will require $60 in material. He will hire some local workers to do most of the work and pay them $70 for each completed shelf. He will rent tools at a cost of $400 per month. Kamal has drawn money out of his savings account in the bank to provide the capital needed to get the operation going. The savings were earning interest at 6 percent annually. The Skylimit advertising agency will handle advertising at a cost of $200 per month. Kamla will hire students to sell his goods and pay a commission of $40 per board. Required: From the foregoing information/above text, identify all the examples you can of the following types of costs (a single item may be identified as more than one type of cost): Cost Item Variable cost (3 marks) Fixed cost (3 marks) Selling or administrative cost (3 marks) Product cost (4 marks) Manufacturing overhead cost (4 marks) Sunk cost (2 marks) Opportunity cost (4 marks) Differential cost (between the alternatives of selling or not selling the stores' goods) (2 marks) Your
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