Indirect manufacturing costs

Indirect manufacturing costs are production costs that cannot be directly associated with a produced unit. Examples of these costs are supplies, depreciation, utilities, production supervisory wages, and machine maintenance. Under financial reporting, indirect manufacturing costs are aggregated into an overhead cost pool and allocated to the number of units produced in a reporting period; doing so results in some capitalization of these costs into the inventory asset.

Similar Terms

Indirect manufacturing costs are also known as factory overhead and manufacturing overhead.

Related Courses

Cost Accounting Fundamentals