Lesson 1 – Overview


Indirect costs are costs that are shared across several programs; they include any expenses that are not directly tied to the operation of a specific program. Knowing your true indirect costs will help you determine how much you will need to subsidize to support your new program

Indirect cost allocations are costs that are not directly associated with a single activity, event or other cost object. Such costs are frequently aggregated into an overhead cost pool and allocated to various activities, based on an allocation basis that has a linkage between the indirect cost and the activity.

Examples of Indirect Costs include:

  • Production management salaries and related benefits
  • Purchasing wages and related benefits
  • Quality assurance staff wages and related benefits
  • Equipment maintenance
  • Depreciation on equipment
  • Facility rent
  • Utilities
  • Salaries
  • Supplies