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What Is The Difference Between Direct Costs And Operating Costs?

A direct cost is a cost that is related to your sales.

An operating cost is a cost that is related to your overheads.

For example, if you run a manufacturing business, the employees who work in the factory making the product are a direct cost, as they are responsible for making the product.

Your office based team of finance, HR and marketing are operating costs, as they are the overheads you need to spend to keep the business running, but are not related to the manufacturing and selling of the product.

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