Cost Accounting

Relationship Costs

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Christian Bien Portrait_edited.jpg

Priya Kaur

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Christian Bien

Learning Objectives

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Indirect Costs
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Indirect Cost Indirect costs are costs that are used in a manufacturing process or service but cannot be easily traceable to the end product or service. 


Some indirect costs can include: 

  • Glue 

  • Paint 

  • Maintenance and repairs 

  • Supervisor's salary/wages 

  • Manager's salary/wages 

  • Utility costs 

  • ICT costs 

Factory Overheads 

Factory overhead is a type of indirect cost that includes all the costs of indirect labour and indirect materials used in the manufacture of a product. 

Factory overhead = Indirect Materials + Indirect Labour

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Direct Costs
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Direct costs are costs that are used in a manufacturing process or service and can easily be traceable to the end product or service. Some direct costs can include either direct materials or direct labour. Direct Materials: 


Direct materials are only materials that are easily traceable to the manufacture of a product. E.g. Wood used in a table. 


Direct Labour: Direct labour is the cost directly associated with the manufacture of a product. E.g. Production line worker's wages.

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