Direct vs. Indirect Expenses: Definitions & Examples

Direct expenses are costs that can be directly attributed to a specific product or service. Some examples of direct expenses include:

* Materials used in the production of a good

* Labor costs associated with the production of a good

* Shipping costs for a product

* Commissions paid to sales representatives for selling a product

Indirect expenses are costs that cannot be directly attributed to a specific product or service. Some examples of indirect expenses include:

* Rent for a factory or office building

* Utilities for a factory or office building

* Salaries for administrative staff

* Marketing and advertising expenses

* Insurance premiums

Direct expenses are typically included in the cost of goods sold, while indirect expenses are typically included in operating expenses.