Indirect cost

This refers to costs (also called overheads) which cannot be attributed to a product being produced or service provided.

Indirect costs could include management and supervisory wages, corporate support costs (such a finance and HR staff), depreciation and factory rent. For example, for an airline company, indirect costs would include the wage costs of the ground crew, IT and HR costs. Some costs may be direct or indirect, depending on their use; for example fuel cost in an accountancy practice is usually allocated as an indirect cost, while for a distribution company it is usually a direct cost.

Indirect cost is a term normally used in management accounting.

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