Costing

Direct Costs

Costs that are directly identified with the product or service

Direct Materials

Materials used in the production of a product

Direct Labour or Wages

The money paid to the workers who directly make a product or provide a service

Direct expenses

Expenses incurred in the production of a particular product.

Indirect Costs

All costs that cannot be classified as direct costs

Indirect Materials

Materials that make production possible but are not directly related to the production of the product.

Indirect Labour or Wages

The payment for labour indirectly linked to the production of the product

Indirect Expenses

Other costs incurred by the factory that are not directly connected to production

Fixed Costs

Costs that do not vary with the level of output

Variable Costs

Costs that vary with the level of output

Fixed costs per unit

The level of fixed costs per unit of output. Formula: Fixed costs/output

Semi-variable costs

A combination of fixed and variable cost.