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Financial Terms | |
Indirect costs |
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Definition of Indirect costsIndirect costscosts that are necessary to produce a product/service but are not readily traceable to particular products or services – see overhead.
Related Terms:activity based costing (ABC)A relatively new method advocated for the Direct costingA costing methodology that only assigns direct labor and material costs Financial distress costsLegal and administrative costs of liquidation or reorganization. Also includes overhead costsOverhead generally refers to indirect, in contrast to direct, Production overheadA general term referring to indirect costs. Agency costsThe incremental costs of having an agent make decisions for a principal. Avoidable costscosts that are identifiable with and able to be influenced by decisions made at the business ![]() capitalization of costsWhen a cost is recorded originally as an increase Carring costscosts that increase with increases in the level of investment in current assets. carrying costscosts of maintaining current assets, including opportunity cost of capital. Costs Capitalized in StealthA particularly egregious form of aggressive cost capitalization costs of financial distresscosts arising from bankruptcy or distorted business decisions before bankruptcy. Direct costscosts that are readily traceable to particular products or services. Execution costsThe difference between the execution price of a security and the price that would have Fixed costscosts that do not change with increases or decreases in the volume of goods or services fixed costscosts that do not depend on the level of output. ![]() fixed expenses (costs)Expenses or costs that remain the same in amount, Friction costscosts, both implied and direct, associated with a transaction. Such costs include time, effort, Funding CostsThe price of obtaining capital, either borrowed or equity, with intent to carry on business operations. Incremental costs and benefitscosts and benefits that would occur if a particular course of action were indirect costa cost that cannot be traced explicitly to a particular Indirect costA cost that is not directly associated with a single activity or event. Such Indirect laborThe cost of any labor that supports the production process, but which is Indirect methodA method of preparing the operating section of the Statement of Cash Flows that does not use the company’s actual cash inflows and cash outflows, but instead arrives at the net cash flow by taking net income and adjusting it for noncash expenses and the changes from last year in the current assets and current liabilities. Indirect-Method FormatA format for the operating section of the cash-flow statement that Indirect quoteFor foreign exchange, the number of units of a foreign currency needed to buy one U.S.$. Indirect TaxesTaxes paid by consumers when they buy goods and services. A sales tax is an example. Information costsTransaction costs that include the assessment of the investment merits of a financial asset. Market impact costsAlso called price impact costs, the result of a bid/ask spread and a dealer's price concession. Market timing costscosts that arise from price movement of the stock during the time of the transaction Menu CostsThe costs to firms of changing their prices. Opportunity costsThe difference in the performance of an actual investment and a desired investment Period costsThe costs that relate to a period of time. Policy Acquisition Costscosts incurred by insurance companies in signing new policies, including expenditures on commissions and other selling expenses, promotion expenses, premium Political CostsThe costs of additional regulation, including higher taxes, borne by large and Preopening CostsA form of start-up cost incurred in preparing for the opening of a new store or facility. Price impact costsRelated: market impact costs Round-trip transactions costscosts of completing a transaction, including commissions, market impact Search costscosts associated with locating a counterparty to a trade, including explicit costs (such as Semi-fixed costs costs that are constant within a defined level of activity but that can increase or decrease when Semi-variable costscosts that have both fixed and variable components. shortage costscosts incurred from shortages in current assets. Standard costsA budget cost for materials and labour used for decision-making, usually expressed as a per unit cost that is applied to standard quantities from a bill of materials and to standard times from a Start-up Costscosts related to such onetime activities as opening a new facility, introducing Sunk costscosts that have been incurred and cannot be reversed. Sunk costscosts that have been incurred in the past. sunk costscosts that have been incurred and cannot be recovered. Trading costscosts of buying and selling marketable securities and borrowing. Trading costs include Transactions costsThe time, effort, and money necessary, including such things as commission fees and the Undepreciated Capital CostsThe tax definition of the value of an asset that is eligible for tax deprecation. variable costscosts that change as the level of output changes. Bankruptcy cost viewThe argument that expected indirect and direct bankruptcy costs offset the other Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |