What are insurance, architectural and engineering fees commonly referred to as?

Insurance, architectural, and engineering fees are categorized as indirect costs because they are not directly tied to the production of a specific good or service. Instead, these costs are necessary for the overall operation of a project or business and support the production process indirectly.

Direct costs, on the other hand, can be directly attributed to a specific product or service, such as raw materials or labor specifically for that project. Fixed costs remain constant regardless of the level of production, such as rent or salaries, while variable costs fluctuate with production levels, like materials and labor for manufacturing.

In summary, the classification of insurance, architectural, and engineering fees as indirect costs highlights their role in supporting the project without being directly assignable to a specific output.