Which are the direct expenses in accounts?

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Bartholome Walter asked a question: Which are the direct expenses in accounts?
Asked By: Bartholome Walter
Date created: Sun, Mar 21, 2021 6:04 PM
Date updated: Wed, Aug 31, 2022 11:24 AM

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Top best answers to the question «Which are the direct expenses in accounts»

  • Direct Expenses Wages Factory rent Cost of raw material Premises renting Fuel Carriage inwards

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Direct expense is an expense incurred that varies directly with changes in the volume of a cost object. A cost object is any item for which you are measuring expenses, such as products, product lines, services, sales regions, employees, and customers. Here are several examples of direct expenses: The materials used to construct a product for sale.

1. Expenses or direct costs incurred while manufacturing the main “product” or “service” of the company are termed as direct expenses. 1. Expenses or indirect costs which are not directly related to the core “product” or “service” of the company are termed as indirect expenses. 2. They become a part of the total cost of goods ...

Definition: Direct expenses are costs that can be traced back to a specific department, often called an object, and are incurred only to benefit that department. In other words, direct expenses sole purpose is to benefit one department. Take receiving department worker’s salary for example. His services only benefit the receiving department.

Direct Expenses All expenses which appear in Trading Account (except purchases) like Labor Power Electricity Expense (Factory) Loading Unloading Expense Warehousing Expenses Custom Clearing Charges Carriage Freight & Cartage Import duty Wages Coal & Fuel Coal, Gas & Water of Factory Consumed Material Export Duty . teachoo.com teachoo.com Best place to learn Accounts, Tax, Excel and Tally. Do the premium course here. Wages on Production Delivery Charges(In Purchase Bill Indirect Expenses All ...

While calculating cost of the goods sold or cost of production it is necessary to include all expenses directly attributable to putting the goods in a saleable condition.For Instance,When Goods are purchased the carriage inward on such purchases is sometimes payable by the buyer.He may also be required to pay freight,duty,clearing charges,dock dues,on imported goods.All these are direct expenses on purchases and must be included in the cost of such purchases.

Expenses connected with purchases of goods are known as direct expenses. For example, freight, insurance, of goods in transit, carriage, wages, custom duty, import duty, octroi duty etc. Without incurring these expenses, it is not possible to bring the goods from the purchase point to the godown of the business. such expenses are collectively known as direct expenses.

Where an overhead cost is not allocable on account of the benefit of the cost/expenditure accruing to two or more products or services or cost centers combined, it is to be attributed to each of the products or services or cost centers by apportioning the total cost among the products or services or cost centers in an appropriate manner. The apportionment among the products or services or cost centers is to be done on the basis of some rational basis. In brief, allocation is allotment of ...

Direct cost is an accounting term that describes costs that can be directly attributable to a cost object. Direct costs take many shapes and forms in accounting and managerial discussions. One example can be the use of capital equipment required for an assembly line.

Direct expenses can be directly traced back to a particular product or cost object. Raw materials and the cost of labour used during the manufacture of the product are good examples of direct expenses that are easily traced back to the product. Depending on the business you run, wages or salaries may also be viewed as direct expenses. Direct expenses are most often variable costs. These costs will fluctuate should you produce more or fewer products at any given time. The direct expense will ...

Direct expense is an expense incurred that varies directly with changes in the volume of a cost object. A cost object is any item for which you are measuring expenses, such as products, services, employees, and customers. Here are several examples of direct expenses:

  • The materials used to construct a product for sale
  • The cost of the freight needed to transport goods to and from the manufacturing facility
  • The labor incurred to produce hours billable to a client
  • Labor and payroll taxes paid based on the number of units produced
  • Production materials consumed during the manufacture of goods
  • The commission and payroll taxes related to the sale of goods or services
Direct expenses are typically listed within the cost of goods sold section of the income statement. However, commission expenses are sometimes categorized lower down, in the selling and administrative expenses section of the income statement.There are many more types of expenses that are not direct expenses - they are called indirect expenses, because they do not vary with changes in the volume of a cost object. Examples of indirect expenses are:
  • Facility rent
  • Facility insurance
  • Salaried compensation
  • Depreciation and amortization
  • Research and development

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