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Hidden costs are those potential costs which impact an organization in the long run but are not visible. The example of hidden cost is cost of low quality due to use of cheap raw material. Though apparently there is a cost saving in terms of saving in raw material cost and cost of sales. Long term impact can be weakening the customer base and lower sales voulme in future.
Other hidden costs are potential cost of absence of effective fiancial and operationa controls, which can result in huge losses.
Unawareness about inherent operational and financial risks are also example of hidden costs.
