Direct vs. Indirect Spend

One of my students asked about the difference between direct and indirect spend, so I thought I'd post my reply here so that others may benefit from the definitions, too...

Direct spend refers to purchases of goods and services that are directly incorporated into a product being manufactured. Examples include raw materials, subcontracted manufacturing services, components, hardware, etc.

Indirect spend refers to purchases of goods and services that are not directly incorporated into a product being manufactured. Examples include computers, safety goggles, printed forms, office supplies, janitorial services, equipment, furniture, etc.

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