Indirect Costs
Indirect costs are expenses of running a business that cannot be assigned to a single product or service. They often include office rent, manager salaries, marketing, utilities, and insurance. Most are fixed, though some may change over time. Companies spread these costs across products using a cost driver, such as machine hours or square footage.
One example would be a non-profit organization that provides both meals for the needy and rental assistance – the rent the organization pays on their office space would be an “indirect cost”, since it cannot be solely attributed to either program.
