This glossary uses Visual Finance™ to bring financial terms to life. Each example shows data from the Round Number Company, a fictional business with simplified figures to make learning easier. For more details, visit 'How to Read Visual Finance'.
Indirect Costs are incurred in the general operations of the business, they are not tied directly to the production of goods and services. Examples include R&D, advertising, salaries for non-production personnel, training, and rent for corporate offices.
Indirect Costs are often considered ‘fixed’ because they are approximately the same from month to month - the rent for Administrative offices does not change if you double your sales from one month to the next.
The terms Direct Cost, OpEx, Indirect Costs, and Fixed Costs are very similar. Check how each term is used in your company.
See also Direct Costs.
See more at the Income|Outcome Blog: WHAT ARE DIRECT COSTS VS INDIRECT COSTS?
The above is our generic explanations of common corporate financial terminology. Actual meanings can vary widely from company to company; in order to have the correct internal definition you need to ask your Finance Department, "What do you mean by that?"
term list.