Question

What's the difference between variable cost and direct cost?

Answer 1

Both the direct cost and variable cost are similar in nature. Variable cost is defined as the cost that is associated with the amount of goods or services the company produces. The variable cost may increase or decrease with the production volume and that is why the name itself has vary which means that it will vary when the output is increased or decreases.

Direct costs are those costs which can be directly traced to a product while variable cost vary with the level of production output. Direct costs can be easily traced to their cost objects.

So the main difference is that the direct cost is directly attributable to the product while the variable cost can either be directly or indirectly attributable.

SUMMARY:

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