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Difference between direct and indirect expenses
pls pls pls can anyone clarify my doubt
How we are differentiating direct and indirect expenses in case of manufacturing a product
it is so confusing
pls reply experts
Replies (9)
direct expense is one which you can identify with end product for eg take product duster the plastic the velcro used you can see that is direct cost for sticking the velcro gum is used on the plastic duster which you cannot see that is indirect material
direct expenses are those which r related to production and purchase whereas indirect r related to sale
Direct expense are relate to the production n purchase whearas indirect for sale eg furniture, wollen cloth etc are indirect bcse they are not in original form they are made for consumers in which production process take place and for sale advertising
Thank you so much for your answers
@ sivaram , @ taha123, @ Nancy yadav
So helpful
Labour cost also cannot be identified with cost object then, how we are saying labour costs are direct cost(sorry to ask such a silly doubt)
sorry to correct they are direct expenses and not direct material
Thanks for the genuine reply sir
Can you give any suggestions to clarify up on these aspects
Go throgh management accounting principles from cma institute india ot cima web site.
expenses releted to purchases, mfg etc., those are direct., and expenses related to sales, and admin those are indirect
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