DIRECT AND INDIRECT COST QUIZ

Question 1. What is a Direct Cost

A. People who are employed to support the business, such as administrators, accountants and retail staff

B. Other costs which are incurred for a specific product or service, such as special tools required to carry out a specific job, such

as shampoo used to wash hair in a salon

C. Expenses that are allocated directly to a given product for a

service

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Question 2. What is an Indirect Cost?

A. Expenses that are not allocated directly to a particular product or service

B. People who are employed to support the business, such as administrators, accountants and retail staff

C. Materials which are bought to create a product or service and are charged directly to that product or service, such as wood to build a shed or turf to lay down in a garden

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Question 3. Which one of the following examples best describes how to work out the Unit Amount?

A. The direct costs plus the indirect costs, divided by the weeks you work in a year

B. The prime cost divided by the indirect costs times the number of weeks in a year

C. The product unit (e.g. 1 song or haircut) x the number of days worked in a week, x the number of weeks worked in a year will give you the product unit.

D. The prime costs + the overheads, divided by the days in a week

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Question 4. What example best describes the Unit Cost?

A. The Unit Cost = Direct Costs + the Prime Costs + the Overheads / the number of weeks worked in a year

B. The Unit Cost = Prime Costs + the number of weeks worked in year / the number of days worked in a week

C.The Unit Cost = Direct Costs + Indirect Costs / the Total Estimated Unit Amount

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