What are Direct, Indirect and Overhead Costs? - Cost Allocation

According to the OMB’s Uniform Guidance, there are only three types of costs – Indirect, Indirect-Admin (Overhead) and Direct. Every organization must define their costs, like how funding runs through the organization, who touches it, what they do and how they do it serves as a foundation for this understanding. So by correctly defining and allocating costs, true cost of service can be fully captured.