An indirect cost has no convenient or economical trace from the cost to the cost pool (the meaningful groups into which the jobs are often collected) or from the cost pool to the cost object (any product, service, customer, activity or organizational unit to which costs are assigned for some management purpose).
Indirect Material Cost
Refers to the cost of materials used in manufacturing that are not physically a part of finished good.
E.g.: supplies used by manufacturing employees, materials required by machines such as lubricants.
Indirect Labour cost
Includes the costs associated with quality control, supervision, support cost associated with manufacturing, inspection, purchase and receiving costs.
Indirect Expenses
Other Indirect Expenses include depreciation on machines and plant, property taxes, utilities, carriage outward, etc.
