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direct costs


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1. Product costs that can be directly traced to a product or cost unit. They are usually made up of direct materials costs (which can be charged directly to the product by means of materials requisitions), direct labour costs (charged by means of time sheets, time cards, or computer direct data entries), and direct expenses (which are subcontract costs charged by means of an invoice from the subcontractor). The total of direct materials, direct labour, and direct expenses is known as the direct cost of sales. 2. Departmental or cost centre overhead costs that can be traced directly to the appropriate parts of an organization, without the necessity of cost apportionment. For example, the costs of a maintenance section that serves only one particular cost centre should be charged directly to that cost centre. Compare indirect costs.

1. Product costs that can be directly traced to a product or cost unit. They are usually made up of direct materials costs (which can be charged directly to the product by means of materials requisitions), direct labour costs (charged by means of time sheets, time cards, or computer direct data entries), and direct expenses (which are subcontract costs charged by means of an invoice from the subcontractor). The total of direct materials, direct labour, and direct expenses is known as the direct cost of sales. 2. Departmental or cost centre overhead costs that can be traced directly to the appropriate parts of an organization, without the necessity of cost apportionment. For example, the costs of a maintenance section that serves only one particular cost centre should be charged directly to that cost centre. Compare indirect costs.

Subjects: Accounting.


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