Which type of cost would freight in typically be categorized as?

Freight in is categorized as a direct cost because it can be directly traced to a specific product or batch of products. When a business purchases goods, the cost of transportation to bring those goods to the company’s location—referred to as freight in—directly contributes to the cost of acquiring those goods for resale. This expense is essential for determining the total cost of goods sold, which is a key figure in the accounting for inventory.

Direct costs are those that are incurred specifically for a product or service and can be linked directly to revenue-generating activities. In contrast, variable costs fluctuate with the level of production or sales but are not always directly linked to a single product. Fixed costs remain constant regardless of the production level, and indirect costs cannot be easily attributed to a single product, making them not suitable categories for freight in.