Which of the following is NOT considered a direct cost in an estimate?

In cost estimation, direct costs refer to expenses that can be directly attributed to a specific project, task, or activity. Labor, materials, and equipment are all direct costs because they can be directly linked to the production of goods or services. For instance, labor costs arise from the workers directly involved in carrying out the project, while materials are the physical items consumed during the process, and equipment costs relate to tools or machinery used specifically for the project.

On the other hand, overhead is considered an indirect cost. Indirect costs cannot be directly traced back to a single project or service and instead represent the expenses necessary for the overall operation of a business. These costs include utilities, administrative salaries, and office supplies that support the general functioning of the organization but are not tied to a specific project or task. This distinction highlights why overhead is not considered a direct cost in an estimate. Recognizing the difference between direct and indirect costs is crucial for accurate budgeting and financial planning in any project.