Difference between direct and indirect cost

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Direct costs are expenses that can be directly attributed to a specific project or activity, while indirect costs are expenses that cannot be directly attributed to a specific project or activity.

Direct costs are typically variable costs, such as labor and materials, that increase or decrease with the level of activity.
Indirect costs are typically fixed costs, such as rent and utilities, that do not vary with the level of activity.
Direct costs are usually easier to track and allocate to specific projects or activities.
Indirect costs are often allocated based on a predetermined formula or percentage.
Examples of direct costs include wages for project staff, materials used in a project, and equipment rental for a specific project.
Examples of indirect costs include rent, utilities, and administrative salaries.

Difference between direct and indirect cost

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