Direct Cost - Definition

A cost that can be directly traced to a Cost Object since a direct or repeatable cause-and-effect relationship exists. A direct cost uses a direct Assignment or cost causal relationship to transfer costs. Direct costs refer to materials, Labor and expenses related to the production of a product. For example, if a company produces artisan furniture, the cost of the wood and the cost of the craftsperson are direct costs, they are clearly traceable to the production department and to each item produced, no Allocation was needed. Direct costs are very often variable costs and vice-versa, but the two are not synonymous: for example, the costs of running machinery used in manufacturing are not direct costs, but they are likely to be variable or semi-variable.

Terms near "Direct Cost"

Direct Quote
Dirty Float (Managed Float)
Discount Rate
Discount Spread
Discounting of Bill
Discretionary Account
Diversified Carry Basket
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