Question

Which of the following is NOT a direct cost?

• A. Raw material consumed during production
• B. Hire charges for tools and equipment
• C. Rent, tax, and duties
• D. Wages to laborers

Answer 1

Answer:

C. Rent, tax, and duties

Direct costs are expenses directly involved in completing a project, such as raw materials, equipment hire, and labor wages. Indirect costs are necessary but not directly involved. When a project is crashed to reduce the duration and cost, direct costs increase and indirect costs decrease. Rent, tax, and duties are not direct costs.