Asked by Pierre Chew Seng Yaw on Jun 09, 2024
Verified
When estimating the costs of a cost object, direct costs are allocated and indirect costs are traced to the object.
Direct Costs
Direct costs are expenses that can be directly attributed to a specific cost object, such as materials and labor directly involved in producing a product.
Indirect Costs
Expenses not directly tied to the production of a product or service, such as rent, utilities, and administrative salaries.
Cost Object
Any item for which a separate measurement of costs is desired, such as a product, service, project, or department.
- Understand the difference between direct and indirect costs in cost allocation.
Verified Answer
Learning Objectives
- Understand the difference between direct and indirect costs in cost allocation.
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