Which of the following would NOT be considered a direct cost?

Direct costs are expenses that can be directly attributed to a specific project or job. These costs are essential for producing the final product or service, and they vary with the level of production. Labor costs, material costs, and subcontractor payments all fit this category because they can be directly linked to the creation of a specific product or the execution of a service.

Warehouse rental, however, is considered an indirect cost. This is because it is not directly linked to a specific job or project; rather, it is a general overhead expense that supports the business as a whole. While warehouse space may be necessary for storing materials or equipment related to different projects, the cost of renting that space does not fluctuate based on the number of projects undertaken at any given time. Therefore, it does not qualify as a direct cost in the context of project-based accounting.

This distinction is crucial in managing project budgets and ensuring accurate cost allocation, as indirect costs are typically spread across multiple projects, while direct costs must be specifically tracked against individual jobs.