Direct cost - Revision history

Designing Buildings at 08:12, 3 February 2023

2023-02-03T08:12:55Z

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	So, indirect costs do not vary directly with production levels, whereas direct costs remain dependent on production levels and will vary when production is increased or decreased.		So, indirect costs do not vary directly with production levels, whereas direct costs remain dependent on production levels and will vary when production is increased or decreased.

−	= Related articles on Designing Buildings ~~Wiki~~ =	+	NB [https://www.rics.org/uk/upholding-professional-standards/sector-standards/construction/rics-cost-prediction-professional-statement-global-1st-edition/ Cost prediction, Professional Statement, 1st edition], published in November 2020 by the Royal Institution of Chartered Surveyors (RICS), defines direct costs as: ‘Costs incurred on labour, material, plant and equipment, etc., i.e. costs that are directly accountable to the project.’
		+
		+	= Related articles on Designing Buildings =

	* Business administration.		* Business administration.

Designing Buildings at 08:20, 27 December 2020

2020-12-27T08:20:56Z

← Older revision		Revision as of 08:20, 27 December 2020
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	* Project overheads.		* Project overheads.

−	[[Category:Theory]] [[Category:Cost_/_business_planning]]	+	[[Category:DCN_Definition]] [[Category:DCN_Guidance]] [[Category:Theory]] [[Category:Cost_/_business_planning]]

Designing Buildings at 13:13, 19 June 2019

2019-06-19T13:13:30Z

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	Direct costs for goods and services are those costs incurred directly for production and include items such as raw materials, labour, equipment, software and power costs. Direct costs can be traced and attributed to a cost ‘object’ which may be a product, department, cost centre or project.		Direct costs for goods and services are those costs incurred directly for production and include items such as raw materials, labour, equipment, software and power costs. Direct costs can be traced and attributed to a cost ‘object’ which may be a product, department, cost centre or project.

−	Indirect costs (sometimes called ‘overheads’) are those necessary to keep a production facility in business and include rent, insurance, advertising and marketing which, although they may be included in the cost of the product or service, they are still indirect costs because they do not vary ~~direclty~~ with the volume of goods/services produced and are not easily attributable to a particular process or project.	+	Indirect costs (sometimes called ‘overheads’) are those necessary to keep a production facility in business and include rent, insurance, advertising and marketing which, although they may be included in the cost of the product or service, they are still indirect costs because they do not vary directly with the volume of goods/services produced and are not easily attributable to a particular process or project.

	The amount added to a product’s unit costs by indirect costs will vary according to production levels, as in the following illustration:		The amount added to a product’s unit costs by indirect costs will vary according to production levels, as in the following illustration:

Designing Buildings at 13:12, 19 June 2019

2019-06-19T13:12:47Z

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−	Direct costs for ~~finished~~ goods and services are those costs incurred directly for production and include items such as raw materials, labour, equipment, software and power costs. Direct costs can be traced and attributed to a cost ‘object’ which may be a product, department, cost centre or project.	+	Direct costs for goods and services are those costs incurred directly for production and include items such as raw materials, labour, equipment, software and power costs. Direct costs can be traced and attributed to a cost ‘object’ which may be a product, department, cost centre or project.

−	Indirect costs (sometimes called ‘overheads’) are those necessary to keep a production facility in business and include rent, insurance, advertising and marketing which, although they may be included in the cost of the product or service, they are still indirect costs because they do not vary with the volume of goods/services produced. The amount added to a product’s unit costs by indirect costs will vary according to production levels, as in the following illustration:	+	Indirect costs (sometimes called ‘overheads’) are those necessary to keep a production facility in business and include rent, insurance, advertising and marketing which, although they may be included in the cost of the product or service, they are still indirect costs because they do not vary direclty with the volume of goods/services produced and are not easily attributable to a particular process or project.
		+
		+	The amount added to a product’s unit costs by indirect costs will vary according to production levels, as in the following illustration:

	The direct cost of manufacturing a steel padlock is £1, made up of:		The direct cost of manufacturing a steel padlock is £1, made up of:
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	But in both months, the indirect costs have not changed, the only variable is in how much indirect cost is incurred by each unit.		But in both months, the indirect costs have not changed, the only variable is in how much indirect cost is incurred by each unit.

−	So, indirect costs do not vary ~~according to~~ production levels, whereas direct costs remain dependent on production levels and will vary when production is increased or decreased~~. So, the cost of raw materials when production doubles also doubles but the direct cost for each padlock remains constant~~.	+	So, indirect costs do not vary directly with production levels, whereas direct costs remain dependent on production levels and will vary when production is increased or decreased.

	= Related articles on Designing Buildings Wiki =		= Related articles on Designing Buildings Wiki =

Designing Buildings at 14:38, 24 May 2019

2019-05-24T14:38:33Z

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	\| [[File:Padlock_800.jpg\|link=File:Padlock_800.jpg]]		\| [[File:Padlock_800.jpg\|link=File:Padlock_800.jpg]]
	\|}		\|}
−
−	~~=== Direct cost ===~~

	Direct costs for finished goods and services are those costs incurred directly for production and include items such as raw materials, labour, equipment, software and power costs. Direct costs can be traced and attributed to a cost ‘object’ which may be a product, department, cost centre or project.		Direct costs for finished goods and services are those costs incurred directly for production and include items such as raw materials, labour, equipment, software and power costs. Direct costs can be traced and attributed to a cost ‘object’ which may be a product, department, cost centre or project.
−
−	~~=== Indirect cost ===~~

	Indirect costs (sometimes called ‘overheads’) are those necessary to keep a production facility in business and include rent, insurance, advertising and marketing which, although they may be included in the cost of the product or service, they are still indirect costs because they do not vary with the volume of goods/services produced. The amount added to a product’s unit costs by indirect costs will vary according to production levels, as in the following illustration:		Indirect costs (sometimes called ‘overheads’) are those necessary to keep a production facility in business and include rent, insurance, advertising and marketing which, although they may be included in the cost of the product or service, they are still indirect costs because they do not vary with the volume of goods/services produced. The amount added to a product’s unit costs by indirect costs will vary according to production levels, as in the following illustration:

Editor at 18:10, 23 May 2019

2019-05-23T18:10:08Z

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	\| [[File:Padlock_800.jpg\|link=File:Padlock_800.jpg]]		\| [[File:Padlock_800.jpg\|link=File:Padlock_800.jpg]]
	\|}		\|}
		+
		+	=== Direct cost ===

	Direct costs for finished goods and services are those costs incurred directly for production and include items such as raw materials, labour, equipment, software and power costs. Direct costs can be traced and attributed to a cost ‘object’ which may be a product, department, cost centre or project.		Direct costs for finished goods and services are those costs incurred directly for production and include items such as raw materials, labour, equipment, software and power costs. Direct costs can be traced and attributed to a cost ‘object’ which may be a product, department, cost centre or project.
		+
		+	=== Indirect cost ===

	Indirect costs (sometimes called ‘overheads’) are those necessary to keep a production facility in business and include rent, insurance, advertising and marketing which, although they may be included in the cost of the product or service, they are still indirect costs because they do not vary with the volume of goods/services produced. The amount added to a product’s unit costs by indirect costs will vary according to production levels, as in the following illustration:		Indirect costs (sometimes called ‘overheads’) are those necessary to keep a production facility in business and include rent, insurance, advertising and marketing which, although they may be included in the cost of the product or service, they are still indirect costs because they do not vary with the volume of goods/services produced. The amount added to a product’s unit costs by indirect costs will vary according to production levels, as in the following illustration:

Editor at 18:06, 23 May 2019

2019-05-23T18:06:39Z

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	* Cost overruns.		* Cost overruns.
	* Cost planning.		* Cost planning.
−	* Direct cost.
	* Estimate.		* Estimate.
	* Head office overheads.		* Head office overheads.

Editor at 18:05, 23 May 2019

2019-05-23T18:05:59Z

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	* Business administration.		* Business administration.
	* Business case.		* Business case.
−	* ~~Construction organisations~~ and ~~strategy~~.	+	* Cost information.
−	* ~~Consortium~~.	+	* Cost overruns.
−	* ~~Funding options~~.	+	* Cost planning.
−	* ~~Preliminary business case~~.	+	* Direct cost.
−	* ~~Private sector~~.	+	* Estimate.
−	* ~~Public sector~~.	+	* Head office overheads.
		+	* How to calculate head office overheads and profit.
		+	* Loss and expense.
		+	* Margin.
		+	* Preliminaries.
		+	* Profit.
		+	* Profit and overheads.
		+	* Project overheads.

	[[Category:Theory]] [[Category:Cost_/_business_planning]]		[[Category:Theory]] [[Category:Cost_/_business_planning]]

Editor at 18:00, 23 May 2019

2019-05-23T18:00:57Z

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	{\|		{\|
−	\| [[File:~~Padlock 800~~.jpg]]	+	\| [[File:Padlock_800.jpg\|link=File:Padlock_800.jpg]]
	\|}		\|}

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	Indirect costs (sometimes called ‘overheads’) are those necessary to keep a production facility in business and include rent, insurance, advertising and marketing which, although they may be included in the cost of the product or service, they are still indirect costs because they do not vary with the volume of goods/services produced. The amount added to a product’s unit costs by indirect costs will vary according to production levels, as in the following illustration:		Indirect costs (sometimes called ‘overheads’) are those necessary to keep a production facility in business and include rent, insurance, advertising and marketing which, although they may be included in the cost of the product or service, they are still indirect costs because they do not vary with the volume of goods/services produced. The amount added to a product’s unit costs by indirect costs will vary according to production levels, as in the following illustration:

−	The direct cost of manufacturing a ~~door handle~~ is £1, made up of:	+	The direct cost of manufacturing a steel padlock is £1, made up of:

	* 10p raw materials		* 10p raw materials
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	The factory’s monthly indirect costs (rent, equipment, marketing etc) = £50,000		The factory’s monthly indirect costs (rent, equipment, marketing etc) = £50,000

−	In January, the factory makes 100,000 ~~door handles~~, so the indirect cost element attributed to each ~~handle~~ is £0.50p.	+	In January, the factory makes 100,000 padlocks, so the indirect cost element attributed to each unit is £0.50p.

−	In February, the factory makes 200,000 ~~door handles~~, so the indirect cost element attributed to each ~~handle~~ is £0.25p.	+	In February, the factory makes 200,000 padlocks, so the indirect cost element attributed to each unit is £0.25p.

	But in both months, the indirect costs have not changed, the only variable is in how much indirect cost is incurred by each unit.		But in both months, the indirect costs have not changed, the only variable is in how much indirect cost is incurred by each unit.

−	So, indirect costs do not vary according to production levels, whereas direct costs remain dependent on production levels and will vary when production is increased or decreased. So, the cost of raw materials when production doubles also doubles but the direct cost for each ~~handle~~ remains constant.	+	So, indirect costs do not vary according to production levels, whereas direct costs remain dependent on production levels and will vary when production is increased or decreased. So, the cost of raw materials when production doubles also doubles but the direct cost for each padlock remains constant.

	= Related articles on Designing Buildings Wiki =		= Related articles on Designing Buildings Wiki =

Editor at 17:59, 23 May 2019

2019-05-23T17:59:02Z

← Older revision		Revision as of 17:59, 23 May 2019
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		+	{\|
		+	\| [[File:Padlock 800.jpg]]
		+	\|}
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	Direct costs for finished goods and services are those costs incurred directly for production and include items such as raw materials, labour, equipment, software and power costs. Direct costs can be traced and attributed to a cost ‘object’ which may be a product, department, cost centre or project.		Direct costs for finished goods and services are those costs incurred directly for production and include items such as raw materials, labour, equipment, software and power costs. Direct costs can be traced and attributed to a cost ‘object’ which may be a product, department, cost centre or project.