direct cost

  

Definition

An expense that can be traced directly to (or identified with) a specific cost center or cost object such as a department, process, or product.

Direct costs (such as for labor, material, fuel or power) vary with the rate of output but are uniform for each unit of production, and are usually under the control and responsibility of the department manager. As a general rule, most costs are fixed in the short run and variable in the long run. Also called direct expense, on cost, variable cost, or variable expense, they are grouped under variable costs.


Use direct cost in a sentence

  • You should always try and figure out the direct cost of any project that you will be taking on in the future.

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  • I wanted to know the direct cost before I purchased anything, because I had a limited budget that I could not lose.

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  • When you are about to make a major purchase their may be more than only the direct cost to factor in.

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