Direct & Indirect costs explained

While the object is not to teach ‘managerial accounting’ it is relevant to understand ‘indirect’ costs in addition to contribution margin as explained last week As I said costs are classified by volume (fixed/variable), management (operating or non-operating) or traceability (meaning traced to a unit or department). 
For example, your office has a laboratory and you want to know the cost structure as compared to other sub-units within your practice. Direct costs are ‘directly’ tied to the lab since they would not be incurred if you closed the unit. So, salaries/benefits of the techs, costs of supplies/materials for performing tests are all direct costs. Indirect costs in this context are costs not directly related but those that are shared by other units in the practice. So, the lease payments, utilities, computer systems and administration etc. These costs may be less but would stay even if the lab was closed tomorrow. Remember that this direct/indirect separation applies to units or sub-units within your practice (micro level) but as far as your corporation is concerned, all of these are ‘direct’ at a high or macro level. It’s confusing but you must also deal with the fact that costs by volume (fixed/variable) and traceability over lap significantly. So, fixed costs (costs irrelevant of volume of services) include both direct and indirect costs whereas variable costs generally include direct costs for the most part. Think about it. Your lab (fixed costs) includes personnel (direct) and expenses for the facility itself (indirect). However, the supplies etc (variable) are all direct costs. I know. This gets my head turned around, too! 
I illustrate this in Chapter 8 of the 2nd volume of "The Smarter Physician Volume 2" .in detail and will illustrate the concept with a real example of 'breakeven' next week