Question

Explain different components of indirect costs.

Answer 1

1. Indirect material cost: All material that is used for ancillary purposes and that cannot be conveniently assigned to ·specific physical units is known as indirect material. Consumable stores, oil lubricants and cotton waste, printing and stationery material, nails, glue and polish used in making furniture, etc., are a few examples of indirect material.
2. Indirect labour cost: Labour employed for the purpose of carrying out tasks incidental to goods produced or services provided is indirect labour. Wages of storekeepers, timekeepers and watchmen, salesmen's salaries, directors' fees, etc., are examples of indirect labour costs.
3. Indirect expenses: These are the expenses which cannot be directly, conveniently and wholly traced to a particular product. Rent, lighting, insurance charges, depreciation, etc., are examples of indirect expenses.