direct cost

PRESENTED BY

CHETAN JAIN 211

MAMTA KAMBLE 213

DIPTI KARPE 215

ADESH KATKAR 217

DARSHA KOTIAN 219

DIRECT COST

A direct cost is an expense directly related to the production of a particular product or service

A good example of a direct cost is the cost of the materials needed to make a product. The usage of the materials is directly related to the manufacture of the product.

Costs usually charged directly Project staff Consultants Project supplies Publications Travel Training

TYPES OF DIRECT COST

Direct Materials

Direct Labour

Direct Expenses

DIRECT MATERIAL COST

The direct material cost are those which can be identified easily and indisputably with a unit of operation or costing unit or cost centre . It is a cost of materials which enter into and form part of product.

e.g -timber in furniture making - clay in brick making - Wood used in production of table and

chairs - steel bars used in steel factory etc.

DIRECT LABOUR COST

The labour cost incurred on the employees who are engaged directly in making the product , their work can be indentified clearly in the process of converting the raw materials into finished product is called direct labour cost.

e.g.- wages paid to workers engaged in machining department , assembling department etc.

DIRECT EXPENSES COST

The direct expenses cost refers to expenses that are specifically incurred and charged for specific or particular job , process , service , cost unit or cost centre .these expenses are also called chargeable expenses.

e.g.-cost of drawings , architects , surveyors and other consultation fees of particular job or work.

Examples of Direct cost

For example, the cost of meat in a hamburger can be attributed directly to the cost of manufacturing that product, as could the cost of packaging materials and preservatives.

Examples of Direct cost

If your company produces a handsets and a production manager is hired to oversee production of that widget, then the production manager's salary is a direct cost.

If you own a carpet cleaning business, which is a service organization, and you hire workers just to clean carpets, their wages are direct costs.

CASE STUDY – ALPHA GROUP

REPARANT RESTAURANT

COST INVOLVED IN PREPARATION OF BUTTER CHICKEN

DIRECT MATERIAL * CHICKEN 98000 * BUTTER 4800 * SPICES 3000 * ONION 25000 * CREAM 500 * SALT 100 * GARLIC 400 * GINGER 200

DIRECT LABOUR * CHEF’S SALARY 6000 * CHEF’S ASSISTANT 3500 DIRECT EXPENSE * LPG 700