Question: Which Of The Following Is An Example Of A Direct Cost?

What are direct raw materials?

Direct raw materials are materials that companies directly use in the manufacturing of a finished product, such as wood for a chair.

Indirect raw materials are not part of the final product but are instead used comprehensively in the production process..

Is raw material a direct cost?

Direct costs are expenses that a company can easily connect to a specific “cost object,” which may be a product, department or project. This can include software, equipment and raw materials. It can also include labor, assuming the labor is specific to the product, department or project.

What are 10 raw materials?

Examples of raw materials:Grains such as wheat and rice.Vegetables such as carrots and onions.Meat such as beef and chicken.Wood from a tree.Honey from a bee’s nest.Minerals or metal from a mine.Crude oil.

What are the examples of direct and indirect expenses?

The Difference in a Table FormatDirect ExpensesIndirect Expenses5. Examples – Direct labour (wages), cost of raw material, power, rent of factory, etc.5. Examples – Printing cost, utility bills, legal & consultancy, postage, bad-debts, etc.4 more rows

What are the 3 types of cost?

Types of costsFixed costs. Fixed costs are costs that do not vary with the level of output in the short term.Variable costs. A variable cost varies in direct proportion with the level of output. … Semi-variable costs. … Total costs. … Direct costs. … Indirect costs.

What is a cost method?

Under the cost method, investors record stock investments at cost, which is usually the cash paid for the stock. They purchase most stocks from other investors (not the issuing company) through brokers who execute trades in an organized market, such as the New York Stock Exchange.

What is an example of a direct material?

Raw materials that are a traceable component of a manufactured product. For example, the direct material of a baseball bat is the wood. Flour, sugar, and vegetable oil are direct materials of a company that manufactures dessert products.

What is an example of a cost?

Examples of such costs are salary of sales personnel and advertising expenses. Generally non-manufacturing costs are further classified into two categories: Selling and distribution costs. Administrative costs.

Is gold a raw material?

Natural resources and manufacturing Gold occurs on earth in the primary raw materials as gold-bearing rock (gold ore) and in secondary deposits as fine metal. … Significant amounts of gold are produced during the refining of other metals such as copper, nickel or other metals.

Is Rent a direct expense?

Although direct costs are typically variable costs, they can also include fixed costs. Rent for a factory, for example, could be tied directly to the production facility. Typically, rent would be considered overhead.

Which of the following is a direct expense?

Direct expenses are generally variable costs. Examples include: direct labor (the cost of paying employees to produce your products) direct materials, including raw materials.

Is salary a direct or indirect expense?

Indirect costs are expenses that apply to more than one business activity. Unlike direct costs, you cannot assign indirect expenses to specific cost objects. Examples of indirect costs include rent, utilities, general office expenses, employee salaries, professional expenses, and other overhead costs.

Where does raw material come from?

The term raw material denotes materials in unprocessed or minimally processed states; e.g., raw latex, crude oil, cotton, coal, raw biomass, iron ore, air, logs, water, or “any product of agriculture, forestry, fishing or mineral in its natural form or which has undergone the transformation required to prepare it for …

Is paper a raw material?

The process of papermaking uses raw materials including water, energy, chemicals and wood chips (1), that contain cellulose. Cellulose is the fiber component of wood, and exists naturally in most plant life.

What are the 4 types of cost?

Types of CostsFixed Costs (FC) The costs which don’t vary with changing output. … Variable Costs (VC) Costs which depend on the output produced. … Semi-Variable Cost. … Total Costs (TC) = Fixed + Variable Costs.Marginal Costs – Marginal cost is the cost of producing an extra unit.

What are the two types of raw materials?

There are two main types of raw materials: direct and indirect. Direct materials are unprocessed resources that can be specifically traced to an end product. Lumber is a good example of a direct raw material.

What is difference between direct and indirect expenses?

Direct Expenses: Direct expenses are those expenses that are paid only for the business part of your home. … Indirect Expenses: Indirect Expenses are those expenses that are paid for keeping up and running your entire home. Examples of indirect expenses generally include insurance, utilities, and general home repairs.