CMA Intermediate · Cost Accounting · Direct Expenses

Direct expenses are best described as expenses other than direct material cost and direct employee cost that are:

Direct expenses are costs other than direct material and direct employee cost that are incurred on a specific cost object and can be identified with it in an economically feasible way. Being untraceable, common, or fixed does not make an expense direct.

AIncurred in the factory but cannot be traced to any product
BIncurred on a specific cost object and identifiable with it in an economically feasible mannerCorrect
CIncurred only on outside parties and always paid in cash
DFixed in nature irrespective of the level of output

Explanation

Direct expenses are defined as expenses, apart from direct material and direct employee cost, that are traceable to the cost object. Option A describes overheads. Nature of payment or fixed behaviour does not decide whether an expense is direct.

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