Shop wages would be classified as what type of expense?

Shop wages are classified as direct costs because they are directly related to the production of goods or the provision of services. This means that these expenses can be directly attributed to specific units of production or service delivery—such as the wages paid to employees who are actively involved in the manufacturing process or in the operation of the shop itself.

In a manufacturing or retail context, direct costs typically include materials and labor that are essential for creating a product or fulfilling an order. Since shop wages are necessary for the generation of revenue through sales, labeling them as direct costs accurately reflects their role in the overall cost structure of the business. This classification is vital for understanding gross profit and for effective cost management in accounting.