This glossary uses Visual Finance™ to bring financial terms to life. Each example shows data from the Round Number Company, a fictional business with simplified figures to make learning easier. For more details, visit 'How to Read Visual Finance'.
Direct Costs are costs that can be easily and accurately traced to a specific product or service. Examples include raw materials and labor. But some companies will also include Depreciation, Factory or Site Overheads, and sales commissions.
The terms Cost of Sales, Direct Costs, and Variable Costs are very similar. Check how each term is used in your company.
See also Indirect Cost.
See more at the Income|Outcome Blog: WHAT ARE DIRECT COSTS VS INDIRECT COSTS?
The above is our generic explanations of common corporate financial terminology. Actual meanings can vary widely from company to company; in order to have the correct internal definition you need to ask your Finance Department, "What do you mean by that?"
term list.