Indirect Operating Costs

Indirect operating costs are expenses that a business incurs to keep the company running but are not directly tied to producing a specific product or service. Examples include electricity, rent, salaries of administrative staff, and maintenance. These costs support overall operations and are shared across multiple departments or products. Understanding these costs is important for accurately calculating the total expenses of running a business and pricing products or services appropriately. They are different from direct costs, which are directly linked to manufacturing a specific item, like raw materials or labor involved in production.