Differentiate between Direct and Indirect Expenses.

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Asked: March 10, 20232023-03-10T05:09:04+05:30 2023-03-10T05:09:04+05:30In: Economics

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Differentiate between Direct and Indirect Expenses.

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Examgyani Team · Accepted Answer · 2022-10-15T01:14:45+05:30

BASIS FOR COMPARISON	DIRECT EXPENSES	INDIRECT EXPENSES
Meaning	Any expenses other than direct material and direct wages, which are outrightly attributable to the product or service is called direct expenses.	Any expenses other than indirect material and indirect wages, which cannot be outrightly allocable to a specific cost centre, is called indirect expenses.
Incurrence	Production or purchase of goods	Office and Administration
Allocation or Apportionment	Directly allocated to the particular cost unit.	Directly apportioned on a suitable basis.
Cost of goods sold	It is included in the cost of goods sold.	It is not included in the cost of goods sold.
Appears in	Debit side of the trading account.	Debit side of profit and loss account.
Treatment	Forms part of prime cost.	Treated as overheads.