Which of the following factors affect the direct/indirect classification of a cost?
A) the level of budgeted profit for the next year
B) the estimation of time required to complete the order
C) the ability to execute an order in the most cost-efficient manner
D) the design where a particular area is dedicated to a specific cost object

Question

Quizplus · Accepted Answer

The design where a particular area is dedicated to a specific cost object affects the direct/indirect classification of a cost. If a cost is incurred specifically for a particular cost object, it is considered a direct cost for that object, while costs incurred for shared resources are classified as indirect costs. The other options (A, B, C) do not directly impact the direct/indirect classification of a cost.

Which of the Following Factors Affect the Direct/indirect Classification of a Cost