Question

What do you mean by direct expenses? (Answer in one sentence)

Answer 1

Direct expenses are the expenses that a business incurs that are directly associated with a cost object.

Answer 2

Answer:

Direct expenses are those which are directly related to the purchase or production of goods or rendering services.

Explanation:

• Direct expenses are those which are directly related to the purchase or production of goods or rendering services.
• These expenses are identified to calculate gross profit.
• These expenses may differ according to the type of business concern such as manufacturing, trading or service, etc.
• These expenses can be allocated to a product or department
• Examples: purchase cost of raw material, wages paid to factory workers, factory rent, etc.
• Direct expenses can be traced clearly to a good that is being manufactured. So the cost of the metal in a part is a direct expense. That being the cost of the metal you had to start with, not just the metal left after machining.