by
Hadi Husaini , Senior Manager - Indirect Taxation , Biological E Ltd
Direct Expense is an expense which varies with final product;
Example: final product - Ketchup bottle
direct expense- tomatoes, bottle, wages
IF FINAL PRODUCT INCREASES, DIRECT EXPENSE INCREASES.
indirect expenses- rent, salaries
IF FINAL PRODUCT INCREASES, INDIRECT EXPENSES REMAIN UNCHANGED (UPTO CERTAIN POINT)
Expenses connected with purchases of goods are known as direct expenses. For example, freight, insurance of goods in transit, carriage, wages, custom duty, import duty, octroi duty etc however all expenses other than direct expenses are assumed as indirect expenses such as rent of building, salaries to employees, legal charges, insurance of building, depreciation, printing charges etc.
