Which of the following is the best description of direct cost?

Which of the following is the best description of direct cost?
A . Direct costs are only variable raw materials that constitute a product
B . Direct costs include raw materials, labour andoverheads
C . Direct costs include only raw materials and labour of making the final product
D . Direct costs include raw materials, labour and other expenses attributable to the final product

View Answer

Answer: D

Explanation:

Direct costs are those costs of a product/service directly attributable/traceable to its production, for example, the costs of labour and materials directly used to produce the goods/services which the organisation sells.