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What Are the Different Types of Indirect Overhead Costs?

By G. Wiesen
Updated May 17, 2024
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Different types of indirect overhead costs can typically be categorized according to the basic types of secondary expenses that are often required to run a business. Utilities, for example, are some of the most common indirect costs and may include electricity, water, and garbage expenses for a business location. Secondary personnel at a company are often considered as part of overhead costs, which can include assistants or maintenance employees not directly related to manufacturing or sales. There are also a number of indirect overhead costs associated with ongoing maintenance or supplies, such as depreciation in property values or expenditures for new supplies and equipment.

Indirect overhead costs are secondary expenses other than those that involve the direct functions of a business. A company that manufactures wooden boards, for example, would include the initial purchase of equipment, the cost for raw materials, and the salary and pay of employees who are directly involved in manufacturing as direct costs. In contrast to this are those indirect costs that a company often has to consider when determining profits, but which can be difficult to anticipate.

Some of the most common types of indirect overhead costs are those that are often required for utilities and similar services. This can include the cost of electricity, water, gas, and garbage disposal services for just about any type of business. Communications utilities, such as phone and Internet services, also contribute to indirect costs for a company, and these types of utilities have become increasingly important for many different types of businesses.

Numerous companies also have to consider secondary personnel who may not be directly involved in manufacturing or sales as a component in indirect overhead costs. Sanitation and cleaning crews, for example, are often employed or hired by companies to keep a business clean. Maintenance workers may also be hired either part-time or full time to ensure that different pieces of hardware and technological services remain operational. These types of employees are usually not strictly crucial for a business to function, but still provide important services.

There are also indirect costs associated with maintaining a business with regard to equipment and physical location. A company that has a retail location, for example, may need to pay on a lease each month or pay taxes on that physical location. Initial expenses for manufacturing equipment may be considered direct costs, but ongoing maintenance supplies and replacement of equipment can be indirect costs. Office supplies that are commonly used and replenished, such as pens, paper, and printer cartridges are forms of indirect overhead costs.

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