Question

The salary of a vice president of an organization is an example of a(n)________ cost while the salary of an electrician hired to work on a construction project is an example of a(n) ________ cost

Answer 1

The salary of a vice president of an organization is an example of an indirect cost while the salary of an electrician hired to work on a construction project is an example of a direct cost.

Direct costs are those business expenses which  can  be directly applied to producing a specific cost object, like a particular good or service. Cost objects are those items to which that expenses are assigned.

Different examples of direct costs include:

Direct labor

Manufacturing supplies

Direct materials

Indirect costs are those expenses which are applied to more than one business activity. Indirect cost are not like the direct cost, They cannot assign indirect expenses to specific cost objects rather they assign those expenses in total.

Examples of indirect costs include:

Rent

Other overhead costs

Utilities

Professional expenses

General office expenses

Employee salaries (e.g., administrative)

Direct costs are those expenses that directly go into producing goods or providing services, while indirect costs are those general business expenses that keep you operating.

To know more about direct costs here:

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