1. Direct CostDefinitionIt is an expense that can direct the manager to a specific cost object or cost center such as a department, product or process. Direct costs vary depending on the production rate but they are uniform for each production unit and are under the control and responsibility of the department head. Most costs are fixed in the short run and flexible in the long run, so they are also called direct expenses on the cost variable.2. Indirect costIndirect cost is any cost that is not directly accounted for with a single final cost objective but identified with two or more final cost objectives or an intermediate cost objective. It is not subject to conduct as a direct cost. Once the direct costs have been determined and allocated directly to the contract or other work, the indirect costs are those that remain to be allocated between the different cost objectives. Indirect costs shall not be allocated to a final cost objective if other costs incurred for the same purpose in similar circumstances have been included as a direct cost of that final cost objective or any other final cost objective. Simply put, indirect costs are those costs that are not intentionally identified. with a specific but experienced organizational activity or project for the joint benefit of projects and other actions. Indirect costs are typically grouped into common pools and allocated to promoting goals through an allocation process or indirect cost rate. An indirect cost rate is just one way to fairly and quickly define the proportion of overhead costs that each project will tolerate. This is the ratio of an applicant's total indirect costs to a fair direct cost base.Indirect Cost RatioIndirect Cost PoolDirect Cost Base = Indirect Cost RateIndirect costs include costs that... . middle of paper ......inearity manner with the number of units produced. Product-level costs: Costs are often fixed and direct with detail on a given product. An example is the salary of a product manager responsible for a single product. The product manager salary is a fixed cost to the company over a wide range of production volume levels. If the company abandons the product altogether, the product manager is no longer needed. Facility-level costs: Costs are generally fixed and direct relative to capacity. An example of this is the salaries of front desk staff, such as the receptionist and office manager. One and only reason ABC provides more correct product cost information is that old-fashioned costing systems frequently allocate all overhead costs, including at the batch, product and costs. overhead costs at the facility level, using an appropriate allocation basis only for unit level costs.