Which of the following is NOT considered a Direct Cost?

Which of the following is NOT considered a Direct Cost?

• A. Administrative Charges
• B. Direct Labor Supervision
• C. Pipe Fitter Salary
• D. Scrap and Rework

Answer: (A)

Direct costs are expenses that can be traced to a specific project with a clear, direct link. Administrative charges fall outside that link—they represent general overhead and support activities (like office administration, accounting, or HR) that serve the whole firm and are allocated to projects rather than charged to a single job. In contrast, a pipe fitter’s salary is directly tied to the work on the project, scrap and rework are extra efforts caused by that project’s execution, and the time of directly supervising the on-site labor is spent specifically on that job. So, administrative charges are the ones that are not direct costs.

Direct costs are expenses that can be traced to a specific project with a clear, direct link. Administrative charges fall outside that link—they represent general overhead and support activities (like office administration, accounting, or HR) that serve the whole firm and are allocated to projects rather than charged to a single job. In contrast, a pipe fitter’s salary is directly tied to the work on the project, scrap and rework are extra efforts caused by that project’s execution, and the time of directly supervising the on-site labor is spent specifically on that job. So, administrative charges are the ones that are not direct costs.