D
- Direct Expenses
- Expenses that are directly attributable to producing a product or delivering a service. For a bakery, the Direct Expenses would typically be the ingredients in the baked goods and the Direct Labor that went into the baking itself. For a lawn mowing service, the Direct Expenses would typically be the gasoline and oil used that month as well as the Direct Labor for the crew that does the mowing. Expenses that are not directly attributed to producing a product or delivering a service are called Indirect Expenses or Overhead.
I
- Indirect Expenses
- Expenses that are not directly attributable to producing a product or delivering a service. These expenses are also called Overhead and are expenses that are necessary no matter what products or services are delivered and no matter what level of Revenue is recognized for a given period. Indirect Expenses include such items as professional fees from accountants and attorneys, building leases, insurance, and management salaries for management staff that oversee all operations. Contrast with Direct Expenses, which are directly attributed to producing a product or delivering a service.