Indirect expenses are expenses other than direct expenses. These refer to those expenses which cannot be directly, conveniently and wholly allocated to cost centers or cost units. E.g. factory rent & insurance, power, general repairs etc.<\/p>\n\n\n\n
Nature of Indirect Expenses<\/strong><\/p>\n\n\n\n Indirect costs are \u201cthose which are incurred for common or joint objectives and therefore cannot be identified readily and specifically with a particular cost unit\/cost centre.<\/p>\n\n\n\n A few examples of such expenses are as follows:<\/p>\n\n\n\n Expenses excluded from costs<\/strong><\/p>\n\n\n\n The following types of items are not included in cost of production or sales:<\/p>\n\n\n\n Notional Expenses<\/strong><\/p>\n\n\n\n Expenses that are usually incurred should be included in costs even if a particular firm is not required to pay for such expenses. Rent for own premises is an example. If a firm occupies its own buildings, it does not pay any rent for this, but for costing purposes, an appropriate amount of rent should be included in costs.<\/p>\n\n\n\n Accounting Treatment of Indirect Expenses<\/strong><\/p>\n\n\n\n Indirect expenses may or may not be allocated. For example, office administrative costs are indirect expenses, but are rarely allocated to anything, unless it is corporate overhead and is being allocated to subsidiaries. These types of indirect expenses are charged to expense in the period incurred. Indirect expenses that are factory overhead will be allocated to those units produced in the factory during the same period that the indirect expenses were incurred, and so will eventually be charged to expense when the products to which they were allocated are sold.<\/p>\n","protected":false},"excerpt":{"rendered":" Indirect expenses are expenses other than direct expenses. These refer to those expenses which cannot be directly, conveniently and wholly allocated to cost centers or cost units. E.g. factory rent & insurance, power, general repairs etc. Nature of Indirect Expenses Indirect costs are \u201cthose which are incurred for common or joint objectives and therefore cannot…<\/p>\n","protected":false},"author":1,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-107122","page","type-page","status-publish","hentry"],"acf":[],"yoast_head":"\n