Direct cost - Financial definition
Concise definition of the term direct cost
A direct cost is a type of expense that can be directly traced to the production of a specific item, such as a product or service.
Comprehensive definition of the term direct cost
Direct costs are often variable costs, which means that they fluctuate as the production volume varies.
Examples for direct cost would be:
- materials or supplies used to fabricate a product
- production-related expenses for power & fuel in the factory
- …