Final answer:
In business, costs are categorized as direct, project overhead, or general/administrative. A project manager's salary is typically classified as a project overhead cost, but some practices may split it between overhead and direct costs based on their involvement in specific tasks.
Step-by-step explanation:
In business accounting, there are mainly three types of costs: direct costs, project overhead costs, and general/administrative costs. Direct costs are those that can be directly attributed to a specific project, such as raw materials and labor specifically for that project. Project overhead costs are those incurred as a result of executing the project but not directly tied to a specific task - examples could include rental of project-specific offices or facilities. General/administrative costs refer to the broader operational expenses of running a business, like corporate office rent, utilities, and certain staff salaries.
The salary of a project manager is generally classified as a project overhead cost because it is tied to the cost of managing and leading the project, but it is not a direct expense like materials or specific labor tasks. However, in some accounting practices, depending on how involved the project manager is in the actual production or execution of project tasks, their salary may be split between direct and overhead costs.
The effectiveness of project managers can vary based on their work style, which might include being collaborative, meeting oriented, hands-on, or independent. Their efficiency can depend on their ability to think big-picture or attend to details. Managerial transparency in forwarding relevant information to the team also plays a critical role in a project’s success.