Business – 5.4 Costs – Cost information | e-Consult
5.4 Costs – Cost information (1 questions)
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Direct costs can be traced directly to a specific product, service or project. Indirect costs cannot be directly linked to a single product and are allocated across multiple products or periods.
- (a) Steel used to manufacture bicycles – Direct cost
- (b) Factory supervisor’s salary – Indirect cost
- (c) Advertising campaign for a new product – Indirect cost (unless the campaign is for a single product line, it is generally treated as an overhead)
- (d) Electricity used to power production machinery – Indirect cost (unless measured per machine for a specific product, it is usually allocated as overhead)