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Direct Cost Percent is the actual percentage of revenue that is applied to the cost of the product plus overhead, fixed costs, etc. Direct cost itself is an amount of money which takes to produce a certain good or service. It refers to the total amount of cost after considering everything need to make that good, including the material, labor etc. Administrative expenses and loss of value are seen as indirect costs because they are not so easily calculated. For example, when someone wants to open a fast food restaurant they try to put their costs on paper to see if there is enough money to start the business. Than they calculate direct costs. A direct cost in that line of business would be the cost of the meat in a hamburger, hot dog and similar, as well as the cost of packaging materials and preservatives of the food. Not even with the knowledge of their direct costs could they know the exact amount of money they need to open up the restaurant. However, with the combination of the indirect costs, which are the administrative part of the job. and the direct cost one can get out a direct cost percentage.









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