Direct Cost

Accounting Corporate Finance Financial Terms Dictionary

Contents

Direct costs are the price that can be directly related to the production of specific goods or services.

Direct costs can be attributed to a cost object, which can be a service, product or department.
Examples of direct costs include direct labor and direct materials.
Although direct costs are usually variable costs, they can also be fixed costs. The rent for a factory, for example, can be linked directly to the production facilities.