Answered: How is the allocation of indirect costs…

Structural Analysis

6th Edition

ISBN:9781337630931

Author:KASSIMALI, Aslam.

Publisher:KASSIMALI, Aslam.

Chapter2: Loads On Structures

Section: Chapter Questions

Problem 1P

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How is the allocation of indirect costs usually done?

Expert Solution

Step 1

Let's first understand what is indirect cost:

Indirect prices area unit those that can't be fully and clearly allotted to one product, service, project or program (unlike direct expenses like value of products oversubscribed or value of services). you'll notice indirect prices, on your statement, below the net profit line. For this reason, indirect prices area unit generally remarked as "below the road prices." On Associate in Nursing statement, these embrace line things like in operation expenses, taxes and interest.

Step 2

There are two way of Allocating indirect cost:

Cost Allocation plan
Indirect Cost Rate (ICR)

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