Question

2- What is the difference between direct and indirect expenses?

Minimum 500 words please

Intext citations and reference please

Reference

Managerial Accounting. 4th ed. John J. Wild, McGraw-Hill /Irwin, 2014

ISBN: 9780078025686

Answer 1

Direct Expense::

Direct expenses are those expenses which are directly inccured for carring out main bussiness activity for example : Purchases of raw materials.

It occurs all expenses other than direct material or direct labour which are specially incurred for a particular cost object and can be specially incurred for a particular cost object and can be identified in an economically feasible way for example, hire charges for some special machinery, cost of defective work.

Indirect Expense :

Indirect expenses are those expenses which are indirectly inccured for carring out main bussiness activity for example : Rent, Salary etc.

Expenses other than direct expenses are known as indirect expenses, that cannot be directly, conveniently and wholly allocated to cost centres. Factory rent and rates, insurance of plant and machinery , power light , heating, repairing,telephone etc are some examples of indirect expenses.

Thank you.