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:
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Depreciation on factory equipment
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Compensation for production supervisors, quality assurance personnel, and the materials management staff
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Factory supplies
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Repairs and maintenance related to factory operations
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Utilities costs incurred for the factory operation
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Terms Similar to Indirect Factory Costs
Indirect factory costs are also called indirect manufacturing costs and factory overhead .