Final answer:
The statement is false; the costs described are indirect costs, not direct overhead costs. Direct costs are expenses directly attributable to a specific project, whereas indirect costs are shared across activities. Understanding the difference between explicit, implicit, and fixed costs is essential for accurately categorizing business expenses.
Step-by-step explanation:
The statement given is False. Direct overhead costs are typically costs that are directly attributable to a project or activity. However, the costs described in the statement such as work space, supervision, project administration, equipment, or other shared resources are actually considered indirect costs or overhead costs because they are not directly linked to a specific project and are shared across different projects or work activities.
In contrast, an example of a direct cost would be the wages paid to employees working specifically on the project. Furthermore, the distinction between explicit and implicit costs is also important in this context. Explicit costs involve actual out-of-pocket expenditures like wages and rent, while implicit costs, such as opportunity costs, relate to the use of resources the firm already owns.
Fixed costs, also known as overhead, remain constant regardless of the level of production. The concept of 'spreading the overhead' refers to the way in which the average fixed cost decreases as the quantity of output increases, as overhead costs are divided over a larger number of units.