Hi.
A supervisor is 'usually' seen as a indirect expense. If that supervisor also works on the production line, is that supervisor now a direct expense?
Is a landlord/lady a direct or indirect expense? If said licence holder sits upstairs with their feet up, is this a direct or indirect cost. No landlord/lady, no pub - legally.
No electricity no machine output.
Just pondering the element of costs -
To me, they are both direct costs.
Thanks
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Johnny - Owner of an overly-active keyboard.
A man who can read, yet doesn't, is in no way wiser than a man who can't.
Direct cost are Variable cost i.e. linked to the activity,Product, service etc.
Indirect costs are Fixed cost i.e. no matter what the cost will arise i.e. rent,salaries, telephone etc.
Yes supervisor salary is fixed cost however if you want to really go into nitty gritty to access the cost of product you could use ABC (Activity Based Costing) and apportion the fixed costs to each activity.
If the licence holder sits upstairs with their feet up s/he might be neither of them if s/he is sole trader ;)
