Direct or Indirect Costs and Benefits

Direct costs are those costs that are directly associated with the system that are incurred in buying equipment, employing people, cost of consumable items, rent for accommodation etc.

Indirect costs are the result of operations that are not directly associated with a given system or activity. For example,heating or airconditioning, insurance and cost of maintenance etc. Indirect costs are often referred to as overheads.

Benefits can also be direct or indirect. A new system that can handle 25% more transactions per day is giving a direct benefit.

Indirect benefits are achieved as a by-product of another activity or system. For example, a system that tracks sales-calls on customers provides an indirect marketing benefit if it provides additional information about competition.

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