Indirect Cost

Indirect Cost – Indirect costs are the expenses that are associated with the manufacturing of a certain product or outcome but are not directly related, such as raw materials or production labor.  Indirect costs can include expenses such as: building and equipment maintenance, security, some technology, advertising, and supervision, among other factors.  Calculating the indirect cost for a product can be challenging, because these costs may be shared with other departments or products.  Yet when a cost figure is established for a particular item, it remains constant and can be used to determine profitability.