Indirect material costs (Material overheads)

Last updated: 26.03.2016

Indirect material costs (material overheads) are together with indirect labor costs and possibly indirect expenses part of indirect (overhead) production costs. As being their part, they are NOT directly and clearly identifiable with cost object (usually product or service).

Example of indirect material costs: negligible material if it is difficult to estimate the consumption for specific product such as oil used to grease all machines in the factory or cleaning supplies

 

Because the production differs from industry to industry, or even from business to business it is difficult to prepare a detailed list of indirect material costs. There are usually only a several general lists and definitions (see e.g. above) which can help to comprehend their meaning. Therefore, the final detailed classification is up to the entity.

 

More about production overheads and their booking here.



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