Indirect costs represent expenses that support the overall operations of an organization and cannot be specifically attributed to a single project, product, or service. Typical examples of indirect costs include utilities, rent, administrative salaries, and office supplies. Unlike direct costs, which are directly tied to the production of goods or services, indirect costs are incurred to maintain the infrastructure and organizational capacity. These costs are often allocated across various departments or cost centers based on an allocation method such as square footage for facility-related expenses or labor hours for administrative support. For instance, the electricity bill for a manufacturing plant is considered an indirect cost because it is required to keep the facility operational but cannot be directly allocated to a single unit of production. Understanding indirect costs is essential for accurate financial reporting and budgeting. The treatment and allocation of indirect costs can differ based on the organization's objectives and accounting standards.