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Direct Cost

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1. Why is it that a direct cost for one department can become an indirect cost for another?

2. How would you make an argument in favor of adopting the direct method for your company?

3. How would you handle a company with a department that not only services other departments, but also produces products?

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Solution Summary

This solution discussed direct cost and direct method within a business setting.

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1. Why is it that a direct cost for one department can become an indirect cost for another?

The direct cost for one department can become an indirect cost for another is important. This is because they both have completely different budgets and use their money differently. For example, in a college, the direct costs for getting textbooks can cost thousands of dollars; however, the indirect costs occur when management has to pay for them on behalf of the other person. As a result, both are affected by having to make the choice to make the decision to make sure that they get everything needed for the college, so that the students are a success in academics and in the workplace. As one can tell, they are not much different, but it is the approach that is quite different because of the financial aspect of the ...

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