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indirect costs
How are Indirect Costs Calculated?
Indirect costs are typically calculated using a predefined formula or
allocation base
. Common methods include:
Percentage of Direct Costs
: A fixed percentage of direct costs is allocated as indirect costs.
Activity-Based Costing (ABC)
: Costs are assigned based on activities that drive indirect costs.
Fixed and Variable Costs
: Separating costs based on their behavior in relation to changes in business activity.
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