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Indirect costs within a business are defined as overhead expenses that are not directly tied to a specific product. These costs are incurred to support the overall operations of the company but cannot be directly traced to the production of a specific good or service.

Examples of indirect costs include utilities, rent, administrative salaries, and depreciation. These costs are essential for maintaining the business's infrastructure and operations, but they don’t fluctuate directly in relation to the quantity of products produced. By contrasting these with direct costs, which are expenses that can be directly linked to the manufacturing of a product, it becomes clear that indirect costs play a critical role in understanding a company's overall cost structure and financial health.

Understanding indirect costs is crucial for budgeting, financial reporting, and pricing strategies, as they affect the profitability of each product in a business.