These are costs which have been incurred in connection with production of a manufactured commodity before it has come out of the workshop. They are also termed as Factory Oncost. Burden, Factory Loading etc. They consist of:
(a) Indirect material
(i) Cost of consumable stores such as cotton waste, lubricating oil, brushes for sweeping etc.
(ii) Cost of stationary used in the works.
(b) Indirect labour
(i) Salary paid to the works manager and other principal officers of the factory including fees payable to the directors devoting attention to factory problems.
(ii) Pay for holiday and sick leave.
(iii) Salaries of store-keepers.
(iv) Contribution to any social security schemes such as to the Employee’s State Insurance Corporation.
(v) Contribution to provident fund of factory employees.
(vi) Salary paid to the supervisory as well as clerical staff of the factory.
(vii) Overtime wages.
(viii) Wages for normal idle time if not directly charged.
(c) Indirect expenses
(i) Rent of factory buildings and land.
(ii) Insurance of factory buildings, plant and machinery and stocks of raw-materials.
(iii) Municipal taxes in respect of factory buildings.
(iv) Work’s canteen and welfare expenses.
(v) Experimental and research work; designing for production and drawing office expenses.
(vi) Power and fuel.
(vii) Stores expenses including salaries of storekeepers and other expenses incurred in handling of stores.
(viii) Cost of training new employees.
(ix) Lighting and heating charges of the factory.
(x) Carriage inward on materials purchased, if such carriage has not been included in the cost of materials.
(xi) Work’s telephone expenses.
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