It is very important to distinguish or differentiate business costs as they help in recognizes the cost figures that your business produce by selling goods or services. There are different types of costs such as direct costs, indirect costs, fixed costs, variable costs,
Direct costs can be defined as costs which are accurately traced to a cost object with little effort. Cost object may be a product, a department or a project etc.
Product cost –includes costs incurred– for manufacturing or for purchasing goods. In case of manufacturing business product cost consists of direct materials, direct labour and factory overhead. In case of trading business, product cost involves purchase price plus transportation in plus other costs associated with
Cost Classifications for Assigning Costs to Cost Objects (Direct and Indirect Cost): Learning Objective of this article: Define and explain direct and indirect cost. Give examples of direct and indirect costs. What is the difference between direct and indirect cost. Definition of Cost Object?
Direct Cost Definition: Direct cost is the cost that can be easily and conveniently traced to the particular cost object under consideration.