Any cost not directly identified with a single final cost objective,
but identified with two or more final cost objectives or with at least
one intermediate cost objectiv.
Indirect costs represent the expenses of doing business that are not
readily identified with a particular grant, contract, project function
or activity, but are necessary for the general operation of the
organization and the conduct of activities it performs. In theory,
costs like heat, light, accounting and personnel might be charged
directly if little meters could record minutes in a cross-cutting
manner. Practical difficulties preclude such an approach. Therefore,
cost allocation plans or indirect cost rates are used to distribute
those costs to benefiting revenue sources.
Looking at it another way, indirect costs are those costs that are not
classified as direct. Direct costs can be identified specifically wih
particular cost objectives such as a grant, contract, project, function
or activity. Direct costs generally include:
1. Salaries are wages (including
vacations, holidays, sick leave, and other excused absences of
employees working specifically on objectives of a grant or contract
– i.e, direct labor costs).
2. Other employee fringe benefits
allocable on direct labor employees.
3. Consultant services contracted to accomplish
specific grant/contract objectives.
4. Travel of (direct labor) employees.
5. Materials, supplies and equipment
purchased directly for use on a specific grant or contract.
6. Communication costs such as long
distance telephone calls or telegrams identifiable with a specific
award or activity.
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