Indirect area

All areas of activity that provide supporting services for the main service are referred to as the indirect area of the company. The supporting services can not be assigned directly to the products sold ( cost and revenue sources ) as individual costs . The costs of the indirect area are therefore overheads .

The indirect area includes, for example

The indirect areas can be classified into the following areas of tension:

production-related and production-distant areas
Customer-oriented and customer-remote areas
Areas close to and away from the product

The designation indirect aims to determine the respective contribution to market success. Areas close to customers and products that directly generate a service that affects sales or profit margins can be managed as profit centers . Areas whose services only indirectly offset the product costs can be managed as service centers . For this purpose, activity allocation , process cost allocation or surcharge procedures can be used.

Areas that develop their effects far from the individual customer business are usually managed as cost centers . A causal allocation of your services to the individual goods or services sold on the market is almost impossible.

Production, trading and industrial companies have to struggle with a rapidly growing indirect area due to a steadily growing administrative burden (for example through quality management , marketing, etc.). These costs should not only be recorded, but also positively influenced. The strategic cost management uses in particular the following methods:

Cost level management
Cost history management
Cost structure management

The following cost accounting approaches are particularly useful here:

Overhead cost management (fixed cost management)
Process cost accounting
Target Costing ( target costing )
Life cycle costs
Cost benchmarking

Indirect area

See also