An indirect cost is business expenses that are not directly related to a particular product or function within the general operation. Costs of this type tend to have an impact on the overall operation of the business. Marking it very difficult to charge the costs to a specific department or associate them with one function.
Cost allocation...
if you are talking about the costs associated with running a business, they are called "operating costs" there are also the costs that are required to get a business running, they are called "startup costs"
product costs are the costs that are assiciated with the whole project you are working on..from start to finnish. period costs are those costs that you need for a certain time fraime within the project itself.
Examples are Sunk Costs, Fixed costs and Allocated Costs.
Quote: "A common practice is to calculate an overhead charge as a percentage of the direct costs of providing the services under the contract." source: http://www.unbc.ca/assets/policy/research/indirect_costs_and_overhead_charges_for_research_and_for_instructional_services_surpluses_2.pdf explaining that overhead charge is describing the indirect cost that a contract causes to the delivering institution.
It is done so to keep control on costs as direct costs are controllable while indirect costs are not.
Answer this question...why do managers cosider direct costs to be more accurate than indirect costs?
No direct costs and indirect costs are not same and opposite of each other.
direct costs,indirect costs,sunk costs, Activity based costing.
cost assignments
Indirect costs are costs that are not directly accountable to a cost object (such as a particular function or product). Indirect costs may be either fixed or variable. Indirect costs include taxes, administration, personnel and security costs, and are also known as overhead.Costs usually charged directlyProject staffConsultantsProject suppliesPublicationsTravelTrainingCosts usually allocated indirectlyUtilitiesRentAudit and legalAdministrative staffEquipment rental
Indirect material is normal fixed cost that is why it is allocated using some kind of ratio or formula.
Indirect costs of tooth decay include things like lost productivity at work and school. Absenteeism due to dental appointments or severe pain is an indirect cost.
All fixed operating expenses from overhead (indirect) departments
Cost allocation...
Feces and smells.
Direct costs- can be conveniently and economically traced to a cost object Indirect costs- cannot be conveniently or economically traced to a cost object. Instead of being traced, these costs are allocated to a cost object in a rational and systematic manner