Accounting for IGCSE & O level - Preparation Of Financial Statements (Section 21 - No. 23)
What is the difference between direct and indirect costs?
Direct costs can be easily and economically traced to a cost object while indirect costs cannot.
Indirect costs can be easily and economically traced to a cost object while direct costs cannot.
Direct costs are always variable, while indirect costs are always fixed.
There is no real difference between the two types of costs.
Explanation
Direct costs can be easily and economically traced to a cost object (e.g., a specific product or department), while indirect costs cannot.
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