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Direct and Indirect expenses-
Direct expenses include all those expenses which have a direct connection with the manufacture of the goods (i.e., conversion of raw materials into finished products). Such expenses are direct expenses and are placed on the debit side of the trading account. These expenses are also called as manufacturing expenses. The list of direct expenses is shown below,
Indirect expenses include all those expenses that are incurred to run business activities. These expenses have no direct connection with the manufacturing of goods. Such expenses are indirect expenses and are placed on the debit side of the profit & loss account. These expenses are also known as office expenses. The list of indirect expenses is shown below,
List of Direct & Indirect Expenses
| S.no | Direct Expenses | Indirect Expenses |
| 1. | Wages | Office rent, rates and taxes |
| 2. | Freight and Carriage | Salaries |
| 3. | Manufacturing Expenses | Legal Charges |
| 4. | Factory Lighting | Audit Fees |
| 5. | Factory Rent | Advertisement Expenses |
| 6. | Factory Insurance | Commission Paid |
| 7. | Gas, Water and Fuel | Discount Allowed |
| 8. | Cargo Expenses | Depreciation |
| 9. | Import Duty | Bank Charges |
| 10. | Shipping Expenses | Printing and Stationery |
| 11. | Dock Dues | Travelling Expenses |
| 12. | Octroi | Salesmen Salaries |
| 13. | Depreciation on machinery | Warehouse Insurance |
| 14. | Motive power | Delivery Van Expenses |
| 15. | Clearing charges | Packing Charges |
| 16. | Custom Charges | Carriage Outwards |
| 17. | Coal, Oil and Grease | Premises Rent |
| 18. | Overhaul of Machinery | Brokerage Charges |
| 19. | Repairs on Machinery | Postage and Cartage |
| 20. | Upkeep and Maintenance | Selling Expenses |
>Related Long Quiz for Practice Quiz 23 – Direct and Indirect Expenses
