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Unit-7 Final Accounts I

In this unit you will learn about the basic framework of final accounts including their presentation in vertical form.

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Distinguish between Direct and Indirect Expenses?

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Learning Pundits Content Team

Written on Apr 16, 2019 3:59:41 PM

The basic differences between direct cost and indirect cost are given as under:

  • The cost which is easily apportioned to a particular cost object is known as Direct Cost. Indirect Cost is the cost that can’t be charged to a particular cost object.
  • Direct Cost benefits the single product or project. Conversely, Indirect Cost benefits multiple product or projects.
  • The total of all the direct cost results in prime cost whereas the result of all the indirect cost is known as overheads.
  • Direct Cost is traceable while Indirect Cost is not.
  • Direct cost is subdivided into the direct material, direct labor, direct expenses. On the other hand, indirect cost is subdivided into production overheads, administration overheads, selling & distribution overheads.