ECONOMICS

Detailed explanation-1: -Direct costs are often variable costs, meaning they fluctuate with production levels such as inventory. However, some costs, such as indirect costs are more difficult to assign to a specific product. Examples of indirect costs include depreciation and administrative expenses.

Detailed explanation-2: -Direct costs are the expenses a business incurs directly to make a product or service, or buy a wholesale product for resale. (All other costs are considered to be indirect costs.)

Detailed explanation-3: -Direct costs (also known as costs of goods sold-COGS) are the costs that can be completely attributed to the production of a specific product or service.

Detailed explanation-4: -Variable costs are costs that change as the volume changes. Examples of variable costs are raw materials, piece-rate labor, production supplies, commissions, delivery costs, packaging supplies, and credit card fees. In some accounting statements, the Variable costs of production are called the “Cost of Goods Sold.”

Detailed explanation-5: -Direct costs are typically variable costs, which means the cost fluctuates based on the production volume-i.e. projected product demand and sales. Indirect costs, on the other hand, tend to be fixed costs, so the expense amount is independent of the production volume.