Into which category, direct or indirect, would each of the elements of cost listed in Activity 8.4 fall, if we were seeking to find the cost of operating the entire business of Sparky Ltd for a month?

Data from Activity 8.4

Sparky Ltd is a business that employs a number of electricians. The business undertakes a range of work for its customers, from replacing fuses to installing complete wiring systems in new houses.

In respect of a particular job done by Sparky Ltd, into which category (direct or indirect) would each of the following cost elements fall?

• The wages of the electrician who did the job;
• Depreciation of the tools used by the electrician;
• The cost of cable and other materials used on the job; and
• Rent of the building where Sparky Ltd stores its inventories of cable and other materials.