What Is Direct Overhead?

Direct costs are a symmetry of "indirect costs." Expenditure for a particular product that can be directly included in the cost of that product based on the original voucher. Direct costs and indirect costs are divided according to the method of calculating production costs into product costs. Whether an expense is a direct expense depends on whether the expense can be directly included in the production cost of the product. Generally speaking, the raw materials used by industrial enterprises to produce products and the piece-rate wages of production workers are direct costs. In an enterprise or workshop that produces a product, the entire production cost of the product can be directly included in the cost of that product, and are therefore direct costs. ^[1]

Direct cost

Right!

Direct costs are a symmetry of "indirect costs." Expenditure for a particular product that can be directly included in the cost of that product based on the original voucher. Direct costs and indirect costs are divided according to the method of calculating production costs into product costs. Whether an expense is a direct expense depends on whether the expense can be directly included in the production cost of the product. Generally speaking, the raw materials used by industrial enterprises to produce products and the piece-rate wages of production workers are direct costs. In an enterprise or workshop that produces a product, the entire production cost of the product can be directly included in the cost of that product, and are therefore direct costs. ^[1]

Direct costs refer to materials used directly in the production of products, wages and benefits of production workers, and other expenses during the product manufacturing process, which are directly included in the production costs of the product.

The Commercial Press's "English-Chinese Dictionary of Securities Investment" explains : direct costs US English: direct overhead; British English: overheads. name. Uncountable . Refers to part of the costs of manufacturing enterprises, such as rent, electricity, insurance, etc. A more common usage is

Direct expenses refer to expenses directly included in the production and operating costs of the enterprise. The confirmation of direct costs involves two issues: one is to determine the economic content included in the direct costs; the other is how to determine the direct costs incurred in the current period.

Direct costs include direct materials, direct labor, purchase prices and other direct costs incurred in the production of goods and the provision of labor services. In manufacturing companies, direct costs include direct materials, direct wages, and other direct expenses. Direct materials include the raw materials, auxiliary materials, spare parts and accessories, outsourced semi-finished products, fuel, power, packaging and other direct expenditures that are actually consumed during the production and operation of the enterprise. Direct wages include the wages, bonuses and allowances of personnel directly engaged in product production And subsidies. Other direct expenditures include salaries, bonuses, allowances and subsidies for personnel directly engaged in the production of products. In commodity circulation enterprises, the direct cost refers to the purchase price of the goods purchased by the enterprise, and the inward freight charges for the purchase of goods are not accounted for as direct costs. Whether the direct costs incurred in the current period should be confirmed in the current period, should be judged and dealt with according to the requirements of the accrual basis principle, which is based on the accrual of costs instead of the amount Whether to pay. That is, in a certain period, all direct costs that should be in the current period, regardless of whether the payment is made, should be recognized as current costs; all direct costs that are not in the current period, even if the payment is made in the current period, should not be recognized as current costs. .