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Prateek Jotwani (Querist)

20 October 2009 sir what is the difference between direct cost and product cost. and what is the difference between indirect cost and period cost

ANIL JANGID

ANIL JANGID (Expert)

20 October 2009 Direct cost: directly attributable to the manufacturing of a product.

production cost: combined costs of raw material and labor incurred in producing goods

Indirect cost not directly attributable to the manufacturing of a product.
period cost:
Definition 1
Selling and general administrative expenses identified with the accounting period in which they are incurred, and charged against sales revenue in the same period. Also called period expense.

Definition 2
Depreciation, interest, rent, and other such costs associated with the passage of time (instead of with the units of output) and

Sreedhar Atchutuni ACA,GradCWA

Sreedhar Atchutuni ACA,GradCWA (Expert)

21 October 2009 Direct Cost: A cost that can be directly traced to producing specific goods or services(Direct Material ,Direct Labour, Direct Expenses). Other costs, such as depreciation or administrative expenses, are more difficult to assign to a specific product, and so are not considered direct costs.

Product cost: Sum of all costs associated with the production of a specific quantity of a good or service.Product cost includes all costs.

Indirect costs: Are costs that are not directly accountable to a cost object (such as a particular function or product). Indirect costs may be either fixed or variable. Indirect costs include taxes, administration, personnel and security costs, and are also known as overhead.

Period Cost: Selling and general administrative expenses identified with the accounting period in which they are incurred, and charged against sales revenue in the same period. Also called period expense.

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