BikeFace is a leading manufacturer of bicycles. Which of the following would be considered direct costs for this organisation? Select TWO.
Correct Answer: A,B
Direct costs are those directly attributable to the production of goods or services. For BikeFace, raw materials such as rubber (used in tyres) and labour (workers assembling bicycles) are direct costs because they contribute directly to finished products. By contrast, advertising spend and IT systems are indirect costs as they support operations but do not directly form part of the bicycle. Category managers must distinguish between direct and indirect costs to design effective sourcing strategies. Direct categories often warrant closer supplier collaboration and longer-term contracts due to their critical role in production. Reference: CIPS L5M6 Study Guide, p.83
