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Financial Terms | |
Direct costs |
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Definition of Direct costsDirect costscosts that are readily traceable to particular products or services.
Related Terms:Indirect costscosts that are necessary to produce a product/service but are not readily traceable to particular products or services – see overhead. activity based costing (ABC)A relatively new method advocated for the Direct costingA costing methodology that only assigns direct labor and material costs Financial distress costsLegal and administrative costs of liquidation or reorganization. Also includes overhead costsOverhead generally refers to indirect, in contrast to direct, Prime costThe total of all direct costs. Production overheadA general term referring to indirect costs. ![]() Agency costsThe incremental costs of having an agent make decisions for a principal. Avoidable costscosts that are identifiable with and able to be influenced by decisions made at the business capitalization of costsWhen a cost is recorded originally as an increase Carring costscosts that increase with increases in the level of investment in current assets. carrying costscosts of maintaining current assets, including opportunity cost of capital. Costs Capitalized in StealthA particularly egregious form of aggressive cost capitalization costs of financial distresscosts arising from bankruptcy or distorted business decisions before bankruptcy. direct costa cost that is distinctly traceable to a particular cost object Direct costA cost that can be clearly associated with specific activities or products. direct costingsee variable costing Direct DepositThe direct transfer of payroll funds from the company bank account direct depositA system where funds are electronically credited to your account by a financial institution or a payroll service. For example, you can arrange with your employer to have your pay cheques automatically deposited into your no fee bank account. Direct estimate methodA method of cash budgeting based on detailed estimates of cash receipts and cash direct laborthe time spent by individuals who work specifically Direct laborLabor that is specifically incurred to create a product. Direct leaseLease in which the lessor purchases new equipment from the manufacturer and leases it to the direct materiala readily identifiable part of a product; the cost of such a part Direct materials costThe cost of all materials used in a cost object, such as finished goods. Direct materials mix varianceThe variance between the budgeted and actual mixes of Direct methodA method of preparing the operating section of the Statement of Cash Flows that uses the company’s actual cash inflows and cash outflows. direct methoda service department cost allocation approach Direct-Method FormatA format for the operating section of the cash-flow statement that reports actual cash receipts and cash disbursements from operating activities. Direct paperCommercial paper sold directly by the issuer to investors. Direct placementSelling a new issue not by offering it for sale publicly, but by placing it with one of several Direct quoteFor foreign exchange, the number of U.S. dollars needed to buy one unit of a foreign currency. Direct-Response AdvertisingAdvertising designed to elicit sales to customers who can be Direct search marketBuyers and sellers seek each other directly and transact directly. Direct stock-purchase programsThe purchase by investors of securities directly from the issuer. Direct write-off methodA method of adjusting accounts receivable to the amount that is expected to be collected by eliminating the account balances of specific nonpaying customers. DirectorA member of a company’s Board of directors. Execution costsThe difference between the execution price of a security and the price that would have Fixed costscosts that do not change with increases or decreases in the volume of goods or services fixed costscosts that do not depend on the level of output. fixed expenses (costs)Expenses or costs that remain the same in amount, Foreign direct investment (FDI)The acquisition abroad of physical assets such as plant and equipment, with Friction costscosts, both implied and direct, associated with a transaction. Such costs include time, effort, Funding CostsThe price of obtaining capital, either borrowed or equity, with intent to carry on business operations. Incremental costs and benefitscosts and benefits that would occur if a particular course of action were indirect costa cost that cannot be traced explicitly to a particular Indirect costA cost that is not directly associated with a single activity or event. Such Indirect laborThe cost of any labor that supports the production process, but which is Indirect methodA method of preparing the operating section of the Statement of Cash Flows that does not use the company’s actual cash inflows and cash outflows, but instead arrives at the net cash flow by taking net income and adjusting it for noncash expenses and the changes from last year in the current assets and current liabilities. Indirect-Method FormatA format for the operating section of the cash-flow statement that Indirect quoteFor foreign exchange, the number of units of a foreign currency needed to buy one U.S.$. Indirect TaxesTaxes paid by consumers when they buy goods and services. A sales tax is an example. Information costsTransaction costs that include the assessment of the investment merits of a financial asset. Interac® Direct PaymentInstead of paying with cash or a credit card, Interac direct Payment allows you to pay for your purchase with a debit card, such as your bank card. The amount of the purchase is electronically debited, or withdrawn, from your bank account (see debit card). Market impact costsAlso called price impact costs, the result of a bid/ask spread and a dealer's price concession. Market timing costscosts that arise from price movement of the stock during the time of the transaction Menu CostsThe costs to firms of changing their prices. Opportunity costsThe difference in the performance of an actual investment and a desired investment Period costsThe costs that relate to a period of time. Policy Acquisition Costscosts incurred by insurance companies in signing new policies, including expenditures on commissions and other selling expenses, promotion expenses, premium Political CostsThe costs of additional regulation, including higher taxes, borne by large and pre-authorized direct depositA system where funds are electronically credited to your account by a financial institution or a payroll service. Preopening CostsA form of start-up cost incurred in preparing for the opening of a new store or facility. Price impact costsRelated: market impact costs Round-trip transactions costscosts of completing a transaction, including commissions, market impact Search costscosts associated with locating a counterparty to a trade, including explicit costs (such as Semi-fixed costs costs that are constant within a defined level of activity but that can increase or decrease when Semi-variable costscosts that have both fixed and variable components. shortage costscosts incurred from shortages in current assets. Standard costsA budget cost for materials and labour used for decision-making, usually expressed as a per unit cost that is applied to standard quantities from a bill of materials and to standard times from a Start-up Costscosts related to such onetime activities as opening a new facility, introducing Sunk costscosts that have been incurred and cannot be reversed. Sunk costscosts that have been incurred in the past. sunk costscosts that have been incurred and cannot be recovered. Trading costscosts of buying and selling marketable securities and borrowing. Trading costs include Transactions costsThe time, effort, and money necessary, including such things as commission fees and the Undepreciated Capital CostsThe tax definition of the value of an asset that is eligible for tax deprecation. variable costscosts that change as the level of output changes. absorption costinga cost accumulation and reporting Bankruptcy cost viewThe argument that expected indirect and direct bankruptcy costs offset the other Cash flow from operationsA firm's net cash inflow resulting directly from its regular operations conversion costRefers to the sum of manufacturing direct labor and overhead Cost of goods soldThe accumulated total of all costs used to create a product or service, Cost of goods soldThe charge to expense of the direct materials, direct labor, and DriverA factor that has a direct impact on the incurring of a cost. For example, adding Factory overheadAll the costs incurred during the manufacturing process, minus the joint costthe total of all costs (direct material, direct labor, normal cost systema valuation method that uses actual product costThis is a key factor in the profit model of a business. Product Product costThe total of all costs assigned to a product, typically including direct standard cost systema valuation method that uses predetermined variable costinga cost accumulation and reporting method Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |