definiens: . Manufacturing Costs means:(a ) To the extent that manufacturing of any Licensed Product or any component thereof is performed byMERRIMACK or BAXTER itself, the actual consolidated, fully burdened cost incurred by MERRIMACK or BAXTER tomanufacture Licensed Product or any component thereof, which costs are limited to:(i ) direct labor costs ( salaries, wages, incentive compensation, share - based compensation andemployee benefits);(ii ) direct materials and packaging costs;(iii ) operating costs of facilities and equipment, excluding any surplus or idle capacity costs;(iv ) a charge for depreciation, repairs and maintenance costs of facilities and equipment;(v ) quality and in - process control costs;(vi ) a charge for overhead costs for raw material and manufacturing administration and management, materials management, storage and handling, and manufacturing and employee training ; and(vii ) charges for spoilage, scrap, rework costs and expired goods;in each of the above cases to the extent reasonably allocable to the manufacture of Licensed Product as determinedin accordance with US generally accepted accounting principles, consistently applied ; and/or 7CONFIDENTIAL EXECUTION VERSION ( b ) To the extent that manufacturing of Licensed Product or any component thereof is performed forMERRIMACK or BAXTER by a Third Party, the actual amounts paid by the Party to such Third Party in connectionwith the manufacturing of Licensed Product or any component thereof