Please read and comment on the following aspects of the case study: a) What are

Question

Please read and comment on the following aspects of the case study:

a) What are the types of direct costs identified in this case? Why are they viewed as direct costs?

b) What are two forms of costs identified?

c) What are some problems that might arise that could impact the budget?

d) Why would Global Green Books set aside contingencies? How would needed rework, if caught in the quality reviews, be accounted for in the budget?

e) What are the main cost drivers of this project?

f) What other information, if any, would you like to see included in the budget for this project? Why?

Explanation / Answer

a).Type of direct costs identified
Direct costs: These are those costs which vary with the level of production. Types of direct costs identified are
Material costs:these includes all permission costs for contents and images which are used in the eBook.

b)
Two forms of costs identifed are!
Direct costs:these are direct costs attributable to production of each eBook which includes permission cost for the content in the book and the cost of images used in publishing each eBook.
Indirect costs:these are those costs that Global Green Book Publisher cannot connect to a specifc eBook produced. These costs are computer costs incurred and the sales commission for each eBook project

c)possible problems that might arise and impact the budget.
Unrealistic assumptions when budgeting may lead to failure in budgeting.
change in economic conditions may lender the budget unrealistic.
Inadequate resources may lead the budget hard to achieve

d)
Global Green Book Publisher should set aside contingencies during budgeting for catering additional costs or unexpected costs during budgeting process. Then the budget exceed the estimates, more sources of cash should be sorted or the budget should be reduced to fit the estimates.

e) What are the main cost drivers of this project?
Main cost drivers of this project are:
Direct hours worked
Permission needed
inspection costs
scanners installing costs
selling of the books
marketing
Number of orders processed
Machine hours
Machine acuisitions

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