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In most business contexts, insurance is classified as an indirect expense. However, the specific type of insurance and where it is applied can change its classification on a financial statement.
“In most cases, depreciation will be an indirect cost to a product or department—the cost object. A portion of the depreciation expense may then be allocated to the cost object,” says Fisher.
“Direct cost” refers to the cost directly tied to your sales. You incur them directly with your sales. “Expense” refers to the operation cost. These are the things you do and spend money on that are not directly tied to the sales.
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