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Direct and Indirect Costs

In: Business and Management

Submitted By paulasantos12
Words 345
Pages 2
Costs are those expenses which are both direct and indirect expenses of operating a business. The general guideline for distinguishing costs is that direct costs are any expenses directly related to providing the product and/or service to the customer and are normally affected by volume, whereas indirect costs are those expenses necessary to maintain the operating business and are not affected by changes in the volume of business. In addition, a subcategory of direct costs breaks out the major expenses entailed in the direct production and service of the product. The following listing identifies the various expense areas of direct and indirect costs:
Direct operating expense
a. Linen, china, glass and flowers
b. Costs of cleaning and associated supplies
c. Employee uniforms and laundry costs
d. Cooking equipment, utensils, and kitchen tools
e. Restaurant decorations, including flowers
f. Menus, wine lists, and other promotional material
g. Licenses and permits
Utility expense
a. Heat, light and power including any type of energy use (gas, oil, electricity and other canned or bottled fuel used in restaurants)
b. Water, ice and trash removal
Administrative expense
Costs directly related to the operation of the business management of the restaurant, including
a. Telephone services and equipment rental
b. Computer and data processing costs
c. Office supplies and printed materials used in the business management of the operation
d. Insurance costs not related to either employee benefits or building occupation costs
e. Management fees, such as accounting and property management
f. Security Service
g. Professional dues and expenses
Advertising expenses, promotional costs, including
a. Advertising through any of the media
b. Costs of advertising or public relations agencies

Repairs and maintenance expenses: costs...

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