Secondary costs

Also known as: secondary costs

In accounting, costs are divided into cost categories. One of these categories is secondary costs. These include all costs that arise within the company through the exchange of services.

Definition / explanation

Secondary costs are all costs for products or services that are created by a company and used within the company. They are also referred to as in-house services. The opposite of secondary costs is that Primary costs.

By assigning the internal costs to cost centers, the secondary costs are assigned directly to the cost centers that use them. A clear allocation to a cost center is often very difficult, so the costs are allocated to different cost centers.

In order to simplify the allocation and apportionment, secondary costs can also be divided into variable and fixed costs.

Examples of secondary costs

  • self-produced electricity
  • Repairs that are carried out in-house
  • Transports that are carried out by the company itself
  • Machines and tools that a company produces itself

Summary

  • Secondary costs arise from the internal exchange of services
  • are also referred to as in-house services
  • In contrast to the secondary costs are the primary costs
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