Direct expenses are related directly to the cost of product which are to be sold or the services to be rendered to the customer. It means when the quantity of product increases the certain expenses also increase in same ratio, That is why, we call all these expenses as direct expenses.

The direct expenses are also known as variable expenses. For example in the case of manufacture of goods, when the wages is paid on piece rate basis of a product then it is the direct expenses. Now, we take the example of service industry.  In transport business, the fuel is direct expenses because it totally depends on the basis of distance, covered by the vehicle. Thus, the direct expenses increase or decrease according to the production or services rendered. Direct expenses are called as direct cost also.