Direct Expenses:- Direct expenses include all expenditures which can be directly allocated and charged to a particular job. The direct expenses include jigs and fixtures, patterns, etc., which have not been included as engineering expenses. Other items are marketing and sales expenses, advertising, and shipping expenses attributed to a particular product.
Direct expenses include the following:
Cost of preparing special drawings, patterns, or models.
Experimental cost of any particular product or project.
Fees of architects and surveyors engaged for a particular job.
Traveling expenses incurred by some technical personnel in visiting the site of any contract or job.
Excise duty paid on the materials purchased. (Royalty paid to the lessor of some special right on the basis of output.)
Expenses incurred on the purchase of direct materials like import duty, dock charges, marine insurance, octroi duty, freight, carriage or cartage inward, etc.
All expenses except direct expenses are classified as indirect expenses. These expenses are also called overhead expenses or on-cost. These expenses are usually further classified as factory expenses, selling and distribution expenses, and administrative expenses.