Indirect Expenses

All expenses except direct expenses are classified as indirect expenses. cost.

• Indirect expenses are indirect materials cost and indirect labour cost which cannot be conveniently identified with, and so, can not be wholly allocated to any particular cost centre or cost unit and are required to be apportioned between two or more cost centres or cost units.
• Indirect expenses may arise in the factory administration or office and selling and distribution division.
• These expenses are also called overhead expenses.
• These expenses are usually further classified as factory expenses, selling and distribution expenses, and administrative expenses.

Indirect Expenses include the following:

1. Rent, rates, insurance, lighting and heating, power, depreciation and stationery, etc. incurred in the various production and service sections of the factory.
2. Rent, rates, insurance, lighting and heating, depreciation, postage and telegram, printing and stationery, telephone charges, bank charges, legal charges, audit fees, etc. incurred in the administrative division.
3. Rent, rates, insurance, hghting8, depreciation, transport charges, advertisement and publicity, travelling expenses, bad debts, etc., incurred in the selling and distribution division of the concern.
4. Labour welfare expenses.