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Finance allah shmoop What is in direct cost All right

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Well let's start like we try to always start with

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the opposite Direct costs are the cost of the medal

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for the engine block for this building direct costs are

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the windshield wipers Direct costs are the glass The door

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handles the pain the radio and the two gallon cup

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holder for holding supersize slurpees Direct build one car and

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you have to pay for this stuff in cash No

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ambiguity Alright these air direct costs of building the car

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But what about indirect costs Well indirect is a totally

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different animal So like whether you build one car that

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day or one hundred Well you have to heat the

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building at least in january in detroit That heat is

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an indirect cost of building the car And yes it's

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not really Detroit it's pontiac michigan Or wherever But we're

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just saying it's cold there What about the insurance he

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had to carry for the car company or the lawyers

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you employ Or the least back on the giant robot

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car makers or the unpaid obligations into the union pension

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fund All indirect costs So yeah it's all the stuff

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You basically have to pay for in order to stay

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in business and avoid major lawsuits So you can continue

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to pay for all those direct costs that actually go

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into the making of your product Like the direct costs

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you can think of as you know kind of things

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that produce a gross margin And the indirect costs you

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know kind of produce an operating margin Just saying All

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right so just make sure that when you're building a

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car you don't sell gps system that gives you in 00:01:38.489 --> [endTime] directions See that That would be bad This

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