Which of the following expenditure groups are direct expenses of the business?

The correct answer is C. Wages, input vehicle expenses and local taxes.

Direct expenses are those that can be directly attributed to the production of a good or service. They are usually variable costs, which means that they change in proportion to the volume of production. Examples of direct expenses include:

• Wages and salaries of production workers
• Materials used in production
• Depreciation of production equipment
• Utilities used in production
• Insurance on production equipment
• Property taxes on production facilities

Indirect expenses are those that cannot be directly attributed to the production of a good or service. They are usually fixed costs, which means that they do not change in proportion to the volume of production. Examples of indirect expenses include:

• Salaries of administrative staff
• Rent on office space
• Depreciation of office equipment
• Utilities used in the office
• Insurance on office equipment
• Property taxes on office buildings

In the case of the question, only option C includes only direct expenses. Option A includes both direct and indirect expenses, as does option D. Option B includes only indirect expenses.