An indirect cost is a cost that does not have a clear and observable relationship to an activity base.
A target cost is the goal that the company will try to produce the product for. This does not have any relationship to an activity base as it is simply management's goal for the cost of production.
A sunk cost is a cost that has already been spent and cannot be changed by any current or future activity. A sunk cost does not have an observable or direct relationship to an activity base.
An engineered cost is one that has an observable and known relationship to an activity base. Direct materials and direct labor and anything that varies with product specifications and production volume are engineered costs.
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