In project cost types, which is typically not tied to a single deliverable and is allocated across multiple activities?

• A. Direct costs
• B. Fixed costs
• C. Variable costs
• D. Indirect costs

Answer: (D)

Indirect costs are those you can’t point to a single deliverable. They represent overhead that supports the project as a whole and must be spread across multiple activities. Because these costs (like utilities, administration, and facility expenses) benefit many parts of the project, they’re allocated using a fair base—such as total hours worked, space used, or other activity drivers—rather than assigned to one specific output.

Direct costs, by contrast, can be clearly traced to a single deliverable (materials or team members dedicated to that one component). Fixed costs stay the same regardless of activity level but aren’t defined by being spread across many activities in the same way as indirect costs. Variable costs change with the amount of work and are typically tied to the level of output.