Direct Costs
FinanceDefinition
Expenses that can be directly attributed to a specific project, product, or service.
Detailed Description
Direct costs are those expenses that can be precisely traced to a particular project, product, or service. These include costs directly linked to production or delivery such as raw materials, direct labor, and specific equipment. In ERP systems, tracking direct costs is crucial for accurate financial reporting and cost management. They play a significant role in understanding and evaluating an organization's cost structure and profitability.
Key Features
- Integration with accounting and production modules
- Precise allocation of costs
- Real-time tracking and reporting
Common Modules
Cost Accounting
Tracks all costs associated with production, including direct costs.
Inventory Management
Monitors direct costs related to the procurement of materials.
Popular Implementations
Manufacturing Process Cost Management
Direct costs are implemented in manufacturing ERP systems to track expenses related to the production process, including labor and raw materials.