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Direct cost includes
(a) Cost of land and development rights:
Include rehabilitation costs, registration charges, stamp duty, brokerage and incidental expenses.
(b) Borrowing costs:
Incurred in relation to a project or which are apportioned to a project, in accordance with AS – 16.
(c) Construction and development costs:
(i) Costs relating directly to a specific project: include
a. land conversion costs, betterment charges, municipal sanction fees, building permission fees etc,
b. site labour costs,
c. costs of materials used in construction or development,
d. depreciation / hiring charges of plant and equipment used for the project,
e. costs of design and technical assistance related to the project,
f. estimated costs of rectification and guarantee work, expected warranty costs,
g. claims from third parties, etc.
(ii) Costs attributable to project activity in general and can be allocated to specific projects: include
a. insurance,
b. cost of general design and technical assistance not directly related to a specific project,
c. construction and development overheads, and
d. borrowing costs.
The allocation of above expenses is to be made on some rational basis, for e.g. normal saleable area, and the basis of allocation is to be applied consistently to all costs having similar characteristics.
(iii) Costs not considered as part of construction and development costs:
a. general administration cost,
b. selling costs,
c. research and development costs,
d. depreciation of idle plant and equipment,
e. unconsumed stock at site,
f. advance payments made to sub-contractors for work to be performed.
iii) Project revenues:
include revenue on sale of plots, undivided share in land; sale of finished or semi-finished structures; consideration for construction, amenities and parking spaces; sale of development rights.
* Employees salaries are indirect cost and labour wages are direct cost
Direct cost
that are readily identified in the construction of real estate, such as:-
labor, production materials, and contractor’s overhead and profit, sales force salaries that relate directly to the manufacture or sale of a product. Direct costs may be fixed or variable.
Indirect cost
Costs of construction not directly related to the sticks and bricks. Examples include
• Real estate taxes • Administrative costs • Professional fees • Insurance • Lease-up expenses
- the second part of the question (employees ) are Indirect cost.
direct cost : used to compile the cost of something ex direct materials
indirect cost may not be assigned to such acost analysis
Direct Cost :
Indirect Cost:
So, for the second part of your question employees are "Indirect" costs.
