Indirect cost

Indirect costs are those costs that are untraceable to particular units or cost centres. It is expenditure on labour, materials or services which cannot be economically identified with a specific saleable cost unit. In order to determine the total cost of production on a “fully absorbed basis) such costs have to be allocated, that is assigned to a single cost unit, cost centre, or cost account or time period.

 

reference: Business Studies / Accounting. Accounts & Finance Glossary. Jim Riley BA(Hons) MBA FCA // tutor2u

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