3. COST ACCOUNTING AND RATE DETERMINATION › 3.3 Direct and Indirect Classification

3.3 Direct and Indirect Classification

A load center is classified as either direct (operational) or
indirect (overhead).  A direct load center is one that can be
charged directly to a specific work cost, such as the storage
of tape reels in the tape library storage load center.  An
indirect load center, such as the services provided by the
hardware/software selection group, cannot be charged directly
to any specific work cost and must be included as a data
processing overhead.
 
There is no fixed rule for classifying activities as either
direct or indirect for all IS organizations.  Generally, if
the load center's cost can be directly tied to the work cost,
then it is a direct center; if it cannot, it is an indirect
center and is treated as an overhead cost.