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'.
Semi-direct costs is a misleading term because a cost is either direct (traceable to a specific product) or indirect (allocated across multiple products or departments). There is no in-between.
While some costs may appear partially direct, accounting follows a fountain model for allocation—first assigning costs to individual products, then to product groups, and finally distributing remaining costs as indirect. A cost that is not directly caused by a single product but is associated with a product group remains indirect, not semi-direct.
The correct term for costs that behave differently based on production levels is semi-variable costs, which contain both fixed and variable components but are still classified as either direct or indirect.
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.