14 October 2009
Direct expenses are those expenses which can be assigned directly to the cost units. On the other hand, indirect expenses are those expenses which can not be directly assigned to the direct cost units.
Direct Expenses are those expenses which affect the gross profit and are taken in the Manufacturing or Trading Account , whereas the Indirect Expenses are those expenses which does not affect gross Profit and this expenses are not taken to Trading Account and are taken in Profit and Loss Account.
So, Repairs to machine will come as direct expenses in the case mentioned by you, since the machine is directly related to construction of pipelines.
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