Indirect Cost

Indirect Cost refers to costs in foreign trade operations that cannot be directly attributed to a specific product, order, or customer. These are typically common expenses incurred to maintain overall operations, such as factory rent, utilities, management salaries, office expenses, equipment depreciation, exhibition fees, and financial expenses. Unlike direct costs (e.g., raw materials, direct labor), indirect costs must be allocated to products or orders using a reasonable basis (e.g., labor hours, machine hours, sales revenue). Usage scenarios: cost accounting, quotation, profit analysis, budgeting. Precautions: The allocation method must be consistent and reasonable to avoid distorting the true cost of products; in FOB/CIF quotations, indirect costs are often included in domestic expenses; there is overlap with period expenses (e.g., selling expenses, administrative expenses), but indirect costs emphasize allocability. Distinction: Direct costs can be traced directly, while indirect costs require allocation; fixed costs may be indirect costs, but indirect costs are not necessarily fixed costs (e.g., indirect materials that vary with output).