Commercial Applications
Give difference between Direct Cost and Indirect Cost.
Cost
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Answer
| S.No. | Basis of Distinction | Direct Cost | Indirect Cost |
|---|---|---|---|
| 1. | Relationship | Directly and wholly related to a particular unit or centre of cost. | Not directly and wholly related to a particular unit or centre of cost. |
| 2. | Components | Direct materials, direct labour, direct expenses. | Indirect materials, indirect labour, indirect expenses. |
| 3. | Examples | Sugarcane used in a sugar mill, wages of sugar workers. | Fuel, wages of storekeeper, rent. |
| 4. | Other name | Also known as prime cost (when totalled). | Also known as overheads or common costs. |
| 5. | Traceability | Can be easily traced to a specific cost object. | Cannot be easily traced; has to be apportioned. |
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