What is the difference between “Direct Costs” and “Indirect Costs”?
Direct costs are those that can be identified specifically with a particular activity. Indirect costs are any costs not directly identified with a single final cost objective, but rather identified with two or more final cost objectives or with at least one intermediate cost objective. Policies governing and examples of acceptable direct and indirect costs can be found here.
Direct costs are costs incurred specifically in the performance of activities required by a contract’s scope of work or other cost objectives. Direct costs also include those costs benefiting both the contracts scope of work and other cost objectives and can be distributed in reasonable proportion to the benefits received by each cost objective involved. This class of direct costs is referred to as Allocated Direct Costs. Indirect costs are those which are necessary to the overall operation of an organization although a direct relationship to a specific cost objective cannot be readily identified. Examples: Direct costs: Travel expenses; vehicle mileage for an outreach worker; specific medical supplies or prescription drugs; consultant fees; equipment; rent, utilities and maintenance for separate office space used by employees working on only one contract; long distance telephone charges. Allocated Direct Cost: Rent, utilities, repairs and maintenance for office space shared by employe
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