Direct and Indirect Cost
1) Direct and indirect cost
Direct cost- We can easy compare direct to fixed cost. They are very similar. Direct cost we can name this cost which are directly attributable to the sale of a product. Direct costs can be identified specifically with a particular sponsored project, or that can be directly assigned to such activity relatively easily with a high degree of accuracy.It is necessarily to good understand that cost shared expenditures are considered to be direct costs.
We have 3 types of direct cost:
• direct materials
- materials and equipment purchased directly for use on specific contract
• direct expenses
- cost of the computing equipments.
• direct labour
- wages or salaries (inc. vacations, holidays, sick pay)
- travel of direct labour (employees)
- cost of the consultant services.
The sum of all 3 types of direct costs we called Prime cost .
To easy show you what is a direct cost we can say that it is a cost of all needed materials and goods to sell a product.
In conclusion we are Computing Store so in our case example of direct cost for us might be delivery person, service support, tills wages for staff witch have a contact with selling products, stores equipments.
Indirect cost
Indirect cost are all other costs that can’t be directly attributable to the final product or service. That includes
• indirect materials
- Factory supplies
- Small items of material
• Indirect labour
- administration
- cleaning staff
- security staff
• Factory overheads
- rates
- insurance
- rates
- telephone
2) Fixed cost and variable cost
Fixed costs - the expenditures which our company has to be independently from the size of the production . Even then, when one nothing not produces in company, they are expenditures like rents , percentages from loans , the costs of preservation, guards and administrative services pays, workers salaries. You should independently pay Fixed costs from the size of the production, and now without
Direct cost- We can easy compare direct to fixed cost. They are very similar. Direct cost we can name this cost which are directly attributable to the sale of a product. Direct costs can be identified specifically with a particular sponsored project, or that can be directly assigned to such activity relatively easily with a high degree of accuracy.It is necessarily to good understand that cost shared expenditures are considered to be direct costs.
We have 3 types of direct cost:
• direct materials
- materials and equipment purchased directly for use on specific contract
• direct expenses
- cost of the computing equipments.
• direct labour
- wages or salaries (inc. vacations, holidays, sick pay)
- travel of direct labour (employees)
- cost of the consultant services.
The sum of all 3 types of direct costs we called Prime cost .
To easy show you what is a direct cost we can say that it is a cost of all needed materials and goods to sell a product.
In conclusion we are Computing Store so in our case example of direct cost for us might be delivery person, service support, tills wages for staff witch have a contact with selling products, stores equipments.
Indirect cost
Indirect cost are all other costs that can’t be directly attributable to the final product or service. That includes
• indirect materials
- Factory supplies
- Small items of material
• Indirect labour
- administration
- cleaning staff
- security staff
• Factory overheads
- rates
- insurance
- rates
- telephone
2) Fixed cost and variable cost
Fixed costs - the expenditures which our company has to be independently from the size of the production . Even then, when one nothing not produces in company, they are expenditures like rents , percentages from loans , the costs of preservation, guards and administrative services pays, workers salaries. You should independently pay Fixed costs from the size of the production, and now without