Direct cost
This query is : Resolved
Neeraj Agarwal
(Querist)
17 May 2013
Sir i have doubt, what is the logic behind considering direct cost to calculate gross profit and at what situation considering of direct cost is irrelevant..
CMA Ramesh Krishnan
(Expert)
19 June 2013
Since the cost involved directly to produce or sale the product.so it is called direct cost
CMA Ramesh Krishnan
(Expert)
19 June 2013
Direct cost now where we can considered as irrelevant
06 July 2013
Definition of 'Direct Cost'
A price that can be completely attributed to the production of specific goods or services. Direct costs refer to materials, labor and expenses related to the production of a product. Other costs, such as depreciation or administrative expenses, are more difficult to assign to a specific product, and therefore are considered indirect costs.
'Direct Cost'
For example, the cost of meat in a hamburger can be attributed directly to the cost of manufacturing that product, as could the cost of packaging materials and preservatives. These are considered variable costs that are inconsistent and change amounts often. An indirect cost, such as the hamburger manufacturer's legal fees and staffing, is anything that is not a direct cost.
A price that can be completely attributed to the production of specific goods or services. Direct costs refer to materials, labor and expenses related to the production of a product. Other costs, such as depreciation or administrative expenses, are more difficult to assign to a specific product, and therefore are considered indirect costs.
'Direct Cost'
For example, the cost of meat in a hamburger can be attributed directly to the cost of manufacturing that product, as could the cost of packaging materials and preservatives. These are considered variable costs that are inconsistent and change amounts often. An indirect cost, such as the hamburger manufacturer's legal fees and staffing, is anything that is not a direct cost.
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