What type of costs are classified as indirect costs in the value chain?

Indirect costs in the value chain refer to expenses that are not directly tied to the production of a product but are necessary for the overall operation of the business. These costs support the broader functions that facilitate production and delivery but do not directly contribute to the creation of a product.

The classification of technology and infrastructure as indirect costs is accurate because these resources encompass a wide array of necessary functions such as IT systems, maintenance of facilities, and overall operational support. They play a critical role in ensuring that the production process runs smoothly and efficiently, even though they may not be directly linked to producing a single unit of product.

On the other hand, raw materials and direct labor costs are considered direct costs because they can be directly traced to specific products or services. Distribution and warehousing expenses vary in nature; while some may be seen as indirect, they are often considered necessary for delivering goods to customers, directly linking them to the product cost. Sales commissions and marketing fees also fall under direct costs as they are directly related to specific sales activities aimed at generating revenue. Thus, technology and infrastructure remains the best identification for indirect costs within the value chain context.