Indirect factory costs definition
/What are Indirect Factory Costs?
Indirect factory costs are all costs incurred by a manufacturing operation, not including direct materials and direct labor. These costs are allocated to the units produced within the same period. If the units are not sold, then the allocated costs are included in ending inventory. If the units are sold, then the associated cost allocation is charged to the cost of goods sold. Examples of indirect factory costs are as follows:
Depreciation on factory equipment
Compensation for production supervisors, quality assurance personnel, and the materials management staff
Factory supplies
Repairs and maintenance related to factory operations
Utilities costs incurred for the factory operation
Related AccountingTools Course
Terms Similar to Indirect Factory Costs
Indirect factory costs are also called indirect manufacturing costs and factory overhead.