What are direct costs in a business?

What are direct costs in a business?

Direct costs are expenses that can be directly attributed to the production of specific goods or services.

Can you give me some examples of direct costs?

Sure! Examples include raw materials, labor costs for production workers, and manufacturing supplies.

How do direct costs differ from indirect costs?

Direct costs are directly tied to production, while indirect costs are overhead expenses not directly linked to a specific product.

Why is it important to understand direct costs?

Understanding direct costs helps businesses price their products accurately and manage their budgets effectively.