Indirect costs overhead

The reported expenditures don t correspond exactly to cash outlays because charges for indirect costs, overhead, or capital equipment and facilities may be made using allocation or depreciation methods that don t correspond in time to actual cash outlays. The term cash costs is used here to differentiate the reported expenditures from their present values in the year of market approval. 

The manufacturing cost consists of direct, indirect, distribution, and fixed costs. Direct costs are raw materials, operating labor, production supervision, utihties, suppHes, repair, and maintenance. Typical indirect costs include payroll overhead, quaHty control, storage, royalties, and plant overhead, eg, safety, protection, personnel, services, yard, waste, environmental control, and other plant categories. However, environmental control costs are frequendy set up as a separate account and calculated direcdy. The principal distribution costs are packaging and shipping. Fixed costs, which are insensitive to production level, include depreciation, property taxes, rents, insurance, and, in some cases, interest expense. 

The determination of direct or prime costs is more straightforward than the determination of indirect or overhead costs. When more than one product is involved, the question arises as to the correct distribution of overhead costs between the various products. 

Another expense which is included under indirect plant cost is the item of construction or field expense and includes temporary construction and operation, construction tools and rentals, home office personnel located at the construction site, construction payroll, travel and living, taxes and insurance, and other construction overhead. This expense item is occasionally included under equipment installation, or more often under engineering, supervision, and construction. If construction or field expenses are to be estimated separately, then Table 15 will be useful in establishing the variation in percent of fixed-capital investment for this indirect cost. For ordinary chemical-process... 

Indirect costs are those costs incurred that are not directly related to the production rate and consist of fixed and plant overhead costs, as shown in Figure 2.3. 

Bruce Harrer, Pacific Northwest National Laboratory I had a follow-on question to that with regard to the indirect costs. There are a lot of centers listed in Figure 4.1. Did they all get a waiver on their indirect costs Also, for the source of funds in Figure 4.1, is it only the industrial contribution that received a waiver on the indirects, or did all these principal investigator grants get a waiver on the indirect costs as well Fventually, someone has to pay for the overhead for these centers, and if you grant waivers, you will have to pay for it somewhere else. 

When construction is to be subcontracted, some accounts (civil, insulation, and paint) are usually estimated on a total cost basis, combining both materials and labor. Other accounts (piping, electrical, instrumentation, equipment erection) are estimated and shown separately as material and labor. In that case, the labor should be loaded with the subcontractor s field indirects plus overhead and profit. The field indirects would reflect only the cost of construction management. 

As 1n any economic study certain assumptions must be made. It 1s not the Intent of this paper to analyze cost factors 1n fine detail, but rather to examine and compare the major direct cost contributors 1n molding large plastic parts by these major process techniques. These direct cost factors are productivity, raw materials, process energy, tooling, flxturlng, hourly labor and capital. Indirect costs that are based on these direct cost Items are not considered 1n this study. Such Indirect Items Include supervision, maintenance, general plant overhead, Insurance, taxes and building depreciation. 

Industry, on the other hand, has never been a significant contributor of research facilities other than its own in-house laboratories (207).2When industry has provided research grants or contracts to academic institutions, its support for indirect and overhead expenses (which pay for facilities and administration) has generally been below the standard Federal contribution for such costs. 

TABLE A-VI.(continued). CONVENTIONAL MgO PROCESS ANNUAL REVENUE REQUIREMENTS Indirect Costs - First Year Overheads... 

Indirect costs Field construction, overhead, Profit 20% ... 

Capital costs include mainly equipment and catalyst costs, installation costs, and indirect costs such as construction overhead and contingency. Operating costs are related mainly to energy consumption, raw materials, membrane replacement, etc. Tables 9.5 and 9.6 summarize the main factors that influence capital and operating costs. 

The Treasury guidelines issued in 1977, set out in some detail the financial considerations that should be used in testing the merit of a proposal for spending made to a public body. Essentially, a cost/benefit analysis was required. But in practice this was not worthwhile for the relatively small sums (some thousands of pounds, without staff salaries and on-costs (indirect or overhead costs) at Daresbury) that were involved in a CCP renewal proposal. At first it was proposed to try and estimate the staff and on-costs of the lab and to attribute it to that lab. This was tried once and then abandoned, as the notional attributions had only a metaphysical significance as long as the lab was in being and actually continued to employ a staff member. 

The instructor should place Overhead 5 on the overhead projector and explain direct costs (such as workers compensation) and indirect costs (such as overtime or training). The instructor should also explain the pain and suffering experienced by the injured employee and his family. The instructor should end the discussion with, So, if we can stop accidents, what should we do ... 

Returning to the Capital Estimate Report, material and manpower costs associated with G and A (General and Administrative) Overheads, 18,200 and 4,600, are obtained from line 13, and material and manpower charges associated with Contract Fees, 21,900 and 16,500, from line 14. These sum to 61,200. The contractor engineering and indirect costs are in row 15, BASE TOTAL, in the first column, under DESIGN ENG G AND PROCUREMENT K-USD, and in the fifth column, under CONSTRUCTIONINDIRECTSK-USD. These are ... 

Total Direct Materials and Labor Costs 785,700 Miscellaneous Installation Costs 0 Material and Labot G A Overhead and Contractor Fees 69,700 Contractor Engineering Costs 558,300 Indirect Costs 482,600... 

Reaching Level B requires us to discard allocations when the cost of one department is assigned to another. Accountants also say that these costs are absorbed when they are allocated. This process roughly assigns overhead, or indirect, costs to users in direct functions, the operations that add value to the product. In a manufacturing company, for example, the cost of toolmakers can be allocated to a direct cost production department where the tools are used. In a bank, information services costs may be allocated to user departments such as the operations departments at branches and the loan-making units. 

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