Download - Direct Cost
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PRESENTED BY
CHETAN JAIN 211
MAMTA KAMBLE 213
DIPTI KARPE 215
ADESH KATKAR 217
DARSHA KOTIAN 219
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DIRECT COST
A direct cost is an expense directly related to the production of a particular product or service
A good example of a direct cost is the cost of the materials needed to make a product. The usage of the materials is directly related to the manufacture of the product.
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Costs usually charged directly Project staff Consultants Project supplies Publications Travel Training
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TYPES OF DIRECT COST
Direct Materials
Direct Labour
Direct Expenses
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DIRECT MATERIAL COST
The direct material cost are those which can be identified easily and indisputably with a unit of operation or costing unit or cost centre . It is a cost of materials which enter into and form part of product.
e.g -timber in furniture making - clay in brick making - Wood used in production of table and
chairs - steel bars used in steel factory etc.
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DIRECT LABOUR COST
The labour cost incurred on the employees who are engaged directly in making the product , their work can be indentified clearly in the process of converting the raw materials into finished product is called direct labour cost.
e.g.- wages paid to workers engaged in machining department , assembling department etc.
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DIRECT EXPENSES COST
The direct expenses cost refers to expenses that are specifically incurred and charged for specific or particular job , process , service , cost unit or cost centre .these expenses are also called chargeable expenses.
e.g.-cost of drawings , architects , surveyors and other consultation fees of particular job or work.
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Examples of Direct cost
For example, the cost of meat in a hamburger can be attributed directly to the cost of manufacturing that product, as could the cost of packaging materials and preservatives.
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Examples of Direct cost
If your company produces a handsets and a production manager is hired to oversee production of that widget, then the production manager's salary is a direct cost.
If you own a carpet cleaning business, which is a service organization, and you hire workers just to clean carpets, their wages are direct costs.
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CASE STUDY – ALPHA GROUP
REPARANT RESTAURANT
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COST INVOLVED IN PREPARATION OF BUTTER CHICKEN
DIRECT MATERIAL * CHICKEN 98000 * BUTTER 4800 * SPICES 3000 * ONION 25000 * CREAM 500 * SALT 100 * GARLIC 400 * GINGER 200
DIRECT LABOUR * CHEF’S SALARY 6000 * CHEF’S ASSISTANT 3500 DIRECT EXPENSE * LPG 700
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