do you have more control over direct costs or indirect costs? explain why.

1 day ago 1
Nature

You generally have more control over direct costs than indirect costs. This is because direct costs are directly tied to producing specific goods, services, or projects, making them easier to trace, manage, and reduce through measures such as negotiating better prices for raw materials or improving operational efficiency. Examples of direct costs include raw materials, direct labor, and manufacturing supplies. In contrast, indirect costs are not directly linked to a specific product or service and often represent fixed overhead expenses such as rent, utilities, and administrative salaries. These costs are incurred regardless of production levels and are more difficult to control or reduce without affecting overall business operations. Thus, direct costs tend to be variable and offer more opportunities for cost-saving actions, whereas indirect costs are often fixed, less flexible, and require more complex allocation methods, making them harder to manage tightly.