Administrative indirect costs (Administrative overheads)

Administrative indirect costs (administrative overheads) are costs that are incurred during management, planning and controlling of the entity´s operations.  Together with selling and distribution overheads they form non-production indirect costs (non-production overheads).

Administrative overheads can include for example:

• rent, depreciation, power or insurance of administrative buildings
• salaries of management, administrative or general accounting staff
• audit and legal fees, bank charges, etc.

Administrative overheads are in most accounting systems (or even in all?) treated as period costs and booked immediately to profit & loss statement.

This is also the case under IAS 2 – Inventory.