Direct labor is an example of a direct cost. Getty Direct costs -- such as labor and parts -- are those linked to the provision of services or the manufacturing of goods.

For example, if a company incurs $100,000 in direct materials, $50,000 in direct labor, $30,000 in variable overhead, and $80,000 in fixed overhead while producing 10,000 units, the absorption ...

Absorption Costing vs. Variable Costing Example. Let's say that ABC Company manufactures and sells 20,000 units of its product yearly. ... Variable costing can exclude some direct fixed costs.

Example of Traditional Costing. ... Its overhead rate would be the result of dividing the $1 million in cost by the 10,000 hours of direct labor. This works out to $100 per hour.

Variable costing can exclude some direct fixed costs. ... Absorption Costing vs. Variable Costing Example . Let's say that ABC Company manufactures and sells 20,000 units of its product yearly.