Indirect costs cannot be easily and cost-beneficially traced to a single cost object.

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Indirect costs are costs that are not directly associated with a single cost object or product, and therefore cannot be easily and cost-beneficially traced to it. Examples include overhead costs, such as rent, utilities, and administrative expenses, which are incurred for the benefit of the entire organization or a group of products. As such, indirect costs need to be allocated or apportioned among multiple cost objects or activities using an appropriate cost allocation method.

Indirect Costs Cannot Be Easily and Cost-Beneficially Traced to a Single