Direct costs are those that are directly accountable to cost objects (such as projects, facilities, functions or specific products). Some overheads that can be directly attributed to a project (such as a designated project manager) can also be classified as direct costs.
Direct costs can be attributed directly to the object. In construction, the cost of materials, labor, equipment, etc., and all efforts or costs involved directly to the object cost is a direct cost. In manufacturing or other non-construction industries, the portion of direct operating costs that can be transferred to a particular product or process is a direct cost. Direct costs are the costs for activities or services that benefit certain projects, such as salaries for project staff and materials needed for a particular project. Because this activity is easily traced to the project, the cost is usually charged to the project on an item-by-item basis.
Direct costs usually include:
- Direct materials used in the creation
- Direct labor
- Direct spending, e.g. royalty payments to patent holders for certain production processes
Video Direct costs
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Source of the article : Wikipedia
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