This text book follows the common practice of describing indirect costs as overhead costs.
The following extract from the NHS costing manual gives separate definitions to indirect costs and overhead costs. It is an example of costing terminology being adapted to suit the particular circumstances of the organisation.
Key Concepts 2.2.1 Direct, Indirect and Overhead Costs 2.2.1.1 Direct costs are those which can be directly attributed to the particular cost centre.
For example, the cost of drugs incurred by a doctor or paediatrics may be directly attributed by the pharmacy system. Hence, drugs could be a direct cost of paediatrics.
2.2.1.2 Indirect costs are those costs which cannot be directly allocated to a particular cost centre but can usually be shared over a number of them. Indirect costs need to be allocated to the relevant cost centres.
For example, there may be no method of directly allocating laundry costs to a particular cost centre and therefore laundry costs are an indirect cost to a number of cost centres.
2.2.1.3 Overhead costs are the costs of support services that contribute to the effective running of a health care provider. Overhead costs may include the costs of business planning, personnel, finance and the general maintenance of grounds and buildings. They need to be apportioned on a consistent and logical basis. Where such services are shared with other parts of the NHS, care should be taken to ensure the relevant proportions are identified to the