Consulting Case Interview Practice Questions

Answer: a - Indirect costs are resources that cannot be assigned to any specific contract, project, service, product or project activity. In this case, overhead is the only one that would fall into that category. With the hot dog, programmer and painter, you can likely assign those costs to specific tasks or products (e.g. the creation of the hot dog you had for lunch).

Key Takeaway: Indirect costs might sound like things you don’t need to care about, but you should. For instance, in many companies, electricity is considered an indirect cost. What if your project requires computers that use twice as much energy as the average computer? Doesn’t that affect the company’s profitability (and the value of your stock options)?