Asked by Brycen Cluster on Jun 13, 2024
Verified
Which of the following statements is true
A) The determination of a cost object is nor relevant to the traceability of costs.
B) An indirect cost can be easily traced to an individual cost object.
C) A direct cost cannot be easily and economically traced to a cost object.
D) An indirect cost is one incurred to support a number of cost objects.
Indirect Cost
Expenses not directly linked to the production of goods or services, such as rent, utilities, and administrative salaries.
Cost Object
Anything for which cost data are desired. Examples of cost objects are products, customers, jobs, and parts of the organization such as departments or divisions.
traceability Of Costs
The ability to assign direct costs to specific cost objects and to allocate indirect costs accurately.
- Learn about the theory distinguishing direct costs from indirect costs.
Verified Answer
RO
Raymond OfoegbuJun 14, 2024
Final Answer :
D
Explanation :
An indirect cost is one that is incurred to support a number of cost objects, while a direct cost can be easily and economically traced to a single cost object. Option A is incorrect since the determination of a cost object is essential for the traceability of costs. Option B is incorrect since an indirect cost cannot be easily traced to an individual cost object. Option C is incorrect since a direct cost can be easily and economically traced to a cost object. Therefore, the correct answer is D.
Learning Objectives
- Learn about the theory distinguishing direct costs from indirect costs.