ACC 349 Week 1 DQ 2

Direct costs are traceable costs as they relate to a specific unit within a business and are for the sole benefit of that unit. Indirect costs pertain to the company as a whole and benefit more than one center. Indirect costs are more difficult to trace as they tend to be more abstract and apply to more than one unit. Indirect costs affect the cost of a product as some can be classified under manufacturing overhead. This combined with direct materials and direct labor, make up product costs. Therefore, a rise in indirect costs can lead to a rise in product cost, and vis versa. Indirect costs should be a part of product costs as such is necessary in the production of a final product.
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