Also called variable costs. They vary with the level of sales as opposed to fixed costs which do not go up and down with sales. For example, if you delivery the products you sell, delivery expenses (variable costs) will go up as sales go up. Building rent and insurance (fixed costs) on the other hand, do not fluctuate with sales.
a cost that can be identified with a particular product or service and not with others; these normally comprise the cost of materials, labour and of expenses directly incurred on the product or service.
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. Also see: Indirect Cost, Tracing
A direct cost is a cost that can be directly related to producing specific goods or performing a specific service. For example, the wages of an employee engaged in producing a product can be attributed directly to the cost of manufacturing that product.
Refers to expenses that are traceable to the specific activity. Labor and material inputs are the most common direct costs but there can also be other traceable costs such as marketing, selling or administrative type costs. Direct costs together with indirect costs determine the total cost of providing a good or services. (also see Indirect Cost)