I'm new to the Bookkeeping World and have a client who is a landscape designer and I am not sure whether 'materials' and 'waste disposal' are direct or indirect expenses.
A rule of thumb to consider is that anything that changes with the level of production would be a direct cost and anything that doesn't is indirect.
For example, the amount of materials and waste is dependant upon the level of work performed making such a direct cost (cost of sales).
The advertisment in the local shop window costs the same regardless as to whether it finds 100 new clients or none. That would be an indirect cost (Expense).
As with almost every rule of thumb you will find exceptions but its a good start point.
In the example given they look to be direct costs of the business.
kind regards,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
