direct cost

Direct Cost

A cost that can be directly traced to producing specific goods or services.

Notes:

For example, the cost of meat in a hamburger can be attributed directly to the cost of manufacturing that product. Other costs, such as depreciation or administrative expenses, are more difficult to assign to a specific product, and so are not considered direct costs.

See also: COGS

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direct cost

A cost that can be directly related to producing specific goods or performing a specific service. For example, the wages of an employee engaged in producing a product can be attributed directly to the cost of manufacturing that product. Certain other costs such as depreciation and administrative expenses are more difficult to assign and are not considered direct costs. Compare indirect cost.