What are direct costs and indirect costs

Direct costs: - Direct costs are directly associated with manufacturing.  Direct costs are generally variable costs and direct costs can include:

• Direct materials
• Direct labor
• Direct expense

Indirect Costs: - Indirect costs are those costs that are incurred in the factory but that cannot be directly associated with manufacturing the product. Indirect Costs are classified according to the three elements of cost, materials labor and overheads.

• Indirect materials
• Indirect labor
• Indirect expenses