Question

In 150 words do you think it is more difficult for a manager to control direct or indirect costs? Why do you think this is so?  

Answer 1

I believe that direct costs can be easily manageable whereas the indirect costs are difficult to control.

Direct costs are cost incurred and are directly related to the production of goods and services. So, if the manager controls the number of units manufactured, he can control the direct costs related to the production activities.

Direct costs can be varied and as such it can be easily controlled by the manager. These costs include direct labor, direct materials,commissions and manufacturing supplies. Managers consider the direct costs to be more accurate as it can be traced to a particular cost of an object. Indirect costs apply to more than one product or object. Their precise benefits to a specific project are often difficult or impossible to trace.

On the other hand, the indirect costs are fixed costs or period costs. These costs do not relate to the production of a particular good and services infact it helps in the production of all goods and services in general like electricity costs, mobile costs, rent, utilities and maintenance.General and administrative expenses.So, these costs have to be incurred and hence are difficult to manage.