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Question
Which definition best describes indirect costs?
Options
Indirect costs are those costs which are not controlled directly by a manager.
Indirect costs are those costs which cannot be directly associated with a product or service.
Indirect costs are always fixed.
Indirect costs are always manufacturing overhead cost.
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Solution
Indirect costs are those costs which cannot be directly associated with a product or service.
Explanation:
Indirect costs cannot be directly associated with a specific product or service; they are incurred for the organisation as a whole (e.g., rent, supervisory salaries) and are allocated across products rather than charged directly.
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