Which costs are directly linked to the production of a specific product?

• A. Fixed Costs
• B. Indirect Costs
• C. Direct Costs
• D. Revenue

Answer: (C)

Direct costs are the amounts that can be traced straight to making a specific product, such as the raw materials used and the direct labor who work specifically on that item. Because these costs can be identified with a single product, they rise or fall exactly with that product’s production, making them directly linked to it. Indirect costs, like factory overhead, support production but aren’t traceable to one product, so they’re allocated rather than directly tied to a specific item. Revenue is income, not a cost. So the best answer is direct costs.