# direct cost

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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.

or

## prime cost

the sum of the DIRECT MATERIALS cost and the DIRECT LABOUR cost of a product. Direct costs tend to vary proportionately with the level of output. See COST.
Collins Dictionary of Business, 3rd ed. © 2002, 2005 C Pass, B Lowes, A Pendleton, L Chadwick, D O’Reilly and M Afferson

## direct cost

the sum of the DIRECT MATERIALS cost and DIRECT LABOUR cost of a product. Direct cost tends to vary proportionately with the level of output. See VARIABLE COST.
Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005
References in periodicals archive ?
ED palliative care referrals had an average variable direct cost of \$5,856 compared to \$15,431 for those patients admitted to our hospice unit.
Indeed, that distance expresses, in percentage points of the country's gross domestic product, the two cost components that we deal with in this paper, namely the direct cost on the abscissa and the avoided damage cost on the ordinate.
National direct costs attributable to AORC increased 24% during 1997-2003, from \$64.8 billion (adjusted to 2003 dollars using the medical care component of the Consumer Price Index) to \$80.8 billion (2).
[It's pretty simple math: the higher the orders per day per sales rep, the lower the overall direct costs per account.] This fundamental math can be used to reduce the overall sales headcount to cover an account base, or to reduce call ratios for the outside sales force.
Table 1: Calculation of Standard Cost for a Production Order Direct material B123 1,000 products X 1 unit X \$10.00 per unit = \$10,000 Direct material A456 1,000 products X 1 unit X \$25.00 per unit = 25,000 Materials handling: *** 1,000 products X 1 unit of B123 X 1/20 X \$50 * = 2,500 1,000 products X 1 unit of A456 X 1/50 X \$50 * = 1,000 Total Direct Product Cost ** \$38,500 Direct Cost per Unit of Product \$38.50 * This \$50 represents the activity cost-driver rate for the material handling process.
Their weighted average direct costs rose and productivity fell in servicing last year, as waves of payoffs and loan setups tested servicing shops around the country.
Many factors in the new program, such as more door-to-door moves, which reduce temporary storage costs and damage claims, will be a hedge on the program's higher direct costs.
Endocarditis caused the longest stay (26 days) and highest direct cost per patient (\$47,200); surgical site infection caused the shortest stay (14 days) and lowest direct cost per patient (\$21,810).
Rather than a direct cost, as in the second case, this scenario stated that one party faced a \$2 opportunity cost, or foregone gain, in the form of the individual having given up an alternative exercise which would have resulted in receiving \$2.
Additionally, the Tax Court held that the Internal Revenue Code's medical benefit "safe harbor" limitation for incurred but unpaid medical claims does not allow a taxpayer to automatically claim a deduction equal to 35 percent of its prior taxable year's qualified direct costs (other than insurance premiums) for medical obligations.
Bottom line: The direct cost of disability is more than \$160 billion per year, according to the National Academy of Sciences.
In the mid-1970s Virginia adopted the IEP costing procedures (with some modifications) to provide information on modified direct cost. A study was conducted to evaluate the stability and consistency of IEP unit costs and productivity ratios for two major research universities for 1978-1979 and 1980-1981.

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