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.


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