Difference Between Direct And Indirect Costs
July 18th, 2006
/
No comments yet
|
Direct costs: |
|
Those costs that are traced to a specific cost objective like product/service.
|
|
Indirect costs: |
|
Those costs that CANNOT be directly traceable to a particular cost objective and incurred for multiple cost objectives. Can also be called Common Cost. |
|
Salient Point: |
|
Direct costs are ALLOCATED to a specific cost objective but Indirect costs or common costs are assigned to multiple cost objective BY APPORTIONMENT. For example : Rental for a premise occupied by several departments is being apportioned on the basis of the relative square meters used
|
Related Posts
- Cost Apportionment and How To Form A Basis To Do The Apportioning of Overheads Costs
- Decision Making-Notional Costs, Sunk Costs & Committed Costs
- Costing Principles: Costs Classification
- Cost Concepts And Classification : Difference between Product & Period Costs
- What Is The Difference Between Allocation And Apportionment?
Leave a comment