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    Direct Costs vs Indirect Costs

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    What is the difference between direct and indirect costs? and What do these mean to the institution being funded for a project? Why do some agencies allow for indirects while others do not ? and
    If a proposal is funded at a level lower than requested (for example, it receives 65% of its request), how can the agency (fundee) modify the project?

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    Solution Preview

    Direct costs are the costs resulting directly from a company's products and/or services. An example of direct cost in a healthcare organization is the cost associated with purchasing a new computer system. In contrast, indirect costs are costs that are indirectly related to the company's products and services; meaning they are not the products and the services. An example of indirect cost is the salary of the managers.

    To the institution that is being funded for a project, this means ...

    Solution Summary

    In this solution various cost types are explored. The difference between direct and indirect costs are determined. What these mean to institution being funded for a project is determined.