bipinchandra (article) (60 Points)
20 February 2016
Aanand Jha
(Employed)
(792 Points)
Replied 21 February 2016
Expenses that do not vary with the level of production, or variable costs that can not be feasibly distributed to various Financial Reporting Centers.
If the said expenses is of fixed nature, can be classified as Indirect expenses..
Saliq Ansari
(CA_Final Student)
(885 Points)
Replied 21 February 2016
Hello Mr. Bipin chandra
As you are in the business whose nature is partly service i.e. hotel business is providing services and that of Restaurant is of non service.
For Restaurant: Cost that are directly related to the main revenue generating activities are to be classified as Direct cost e.g. in Restaurant main revenue generating activity is Food, hence cost incurred on Purchasing Raw Food items, Cost incurred on Gasoline for making food, Salary paid to Chef for preparing food items, etc are to be clasified as Direct. Other costs to be classified as indirect e.g. salary of person serving food, manager salary, electricity expenses etc.
For Hotel : Here as hotel is completely a service organisation the direct costs would be those which are directly related to the revenue generating activities, In hotel main revenue generating activity is Reveneu from Renting out hotel rooms, Hence expenses those are directly attributable to Renting Rooms are to be Classified as Direct Otherwise as Indirect.
bipinchandra
(article)
(60 Points)
Replied 22 February 2016
dear sir
a compleate technical answe r
thank's
bipinchandra
CAclubindia
