Direct and Indirect Labor Costs

[SqueeGee]

How would you classify talking to/emailing/meeting with clients(and potential clients), estimating and taking orders? Are they direct costs or indirect costs?

I'm analyzing our business costs and estimating how much of our time is spent on direct costs(production) and how much is indirect(overhead).

 

[2B]

its direct,

example you are with customer ABC trying to get that new job approved, but you are not touching base with customer XYZ who has already approved the job and waiting for the product(s) but you can't produce until you are done with ABC.

Overhead, has to do more with your utilities, cost of materials/supplies, rent, taxes, etc...

 

[SqueeGee]

In my mind, sales time spent with potential clients who turn into actual orders would be direct costs. Time spent with potential clients who don't turn into actual orders would be indirect(overhead).

 

[2B]

either way it will get recorded as labor/time

as long as you are consistent it really doesn't matter

 

[SqueeGee]

I agree that at the end of the day, it won't affect the bottom line for historical purposes.

My intent, however, is to calculate our overhead(indirect costs) to insure that our billing rates are accurate.