Direct and Indirect cost

Direct Cost:
Direct costs are those cost that have directly accountable to
specific cost object such as a process or product.
Ex: wages paid ,salary paid labor, material…etc

Indirect cost:
Indirect cost are those costs which are not directly
accountable to specific cost object or not directly related to
production .
Ex: insurance, maintenance ,telecom, ….etc
 Explicit cost and Implicit cost
Explicit cost:
Explicit cost refers to the money expended to buy or hire
resources from outside the organization for the process of
production.

Ex: the payment made for raw- materials, power, light, fuel the
wages and salaries paid to the workers and other staff, the rent
paid on the land and the interest paid on the borrowed capital
etc. Payments on all such accounts will be included in explicit
cost
 IMPLICIT COST
Implicit costs are a part of opportunity cost. They are the
theoretical costs ie., they are not recognised by the
accounting system and are not recorded in the books of
accounts but are very important in certain decisions. They
are also called as the earnings of those employed resources
which belong to the owner himself. Implicit costs are also
called as "Imputed costs".

Ex. Rent on idle land, depreciation on dully depreciated

property still in use, interest on equity capital etc.