In the case study, there certain direct costs that have been identified and they include the direct and in-direct types of costs. The costs are the direct and the in-direct ones. Meanwhile, the forms of costs identified are the direct costs and the material costs. Examples of the direct types of costs listed by Schwochau, Feuille & Delaney, (1988) are the labor costs, facility costs, equipment costs and the sub-contractor or the outside labor cost. Likewise, the examples of the material costs are permission costs for the used images and contents. Normally, the indirect costs include the support costs linked with the computer and commission got from sales.
According to Fisher, Frederickson & Peffer, (2002), there are problems that may emerge and eventually have impact on the budget. Some of them include failure to plan for the job orders and consequently resulting into the follow up the costs of every book that have possibly have impact on the budget. Hence, the Global Green Book has no option but to set aside the contingencies. Besides this, there would still be the need of reworking if found in quality issues that then must be factored in the budget. In case of the unforeseen instances or circumstances happens, the contingency will entail this aspect of the incidental expenses.
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Marginson, (1999) believed that t his project has been linked by variety of cost drivers. However, the main has been the internal labor cost as identified in the case study. Meanwhile, the budget requires other information that should be included in it apart from those already factored. For example, besides the internal labor cost, the equipment cost and each implement utilized within the project should also be factored as well. In this case, it entails the facilities and the equipment applied during the performance of the project so that it becomes very essential to the clients in knowing the cost because they will end up using it during the time of budgeting.
In the table 1 below, it presents on the budget for the European History eBook project. The table factors the costs by the major phases of work that constitute the making of the European History eBook
| Item | Cost in Dollars ($) |
| Cost of labor | 264 |
| Cost of materials | 1000 |
| Cost of equipment | 800 |
| Cost of subcontract | 500 |
| Cost of computer support | 600 |
| Total | 3164 |
Table 1: Budget for the European History eBook project
As already presented on table 1 above, the cost of labor is $264. Meanwhile, the total estimates of the cost for the European History eBook is as worked out below;
25% profit margin = 0.25 x 3164 = 791
10% contingency on labor = 0.1 x 3164 = 316.4
20% contingency on permission = 0.2 x 3164 = 632.8
Total =1740.2
Total estimated cost = 1740.2 + 3164 = $ 4904.2
References
Fisher, J., Frederickson, J. R., & Peffer, S. A. (2002). The effect of information asymmetry on negotiated budgets: An empirical investigation. Accounting, Organizations and Society , 27 (1-2), 27-43.
Marginson, D. E. (1999). Beyond the budgetary control system: towards a two-tiered process of management control. Management accounting research , 10 (3), 203-230.
Schwochau, S., Feuille, P., & Delaney, J. T. (1988). The resource allocation effects of mandated relationships. Administrative Science Quarterly , 418-437.
