When determining the full cost of a cost object:
A)non-manufacturing costs are always expensed in the current period
B)the indirect costs need to be allocated to the cost object on the basis of its usage of a chosen cost driver or drivers.
C)indirect costs are ignored
D)none of the options is correct

Question

Quizplus · Accepted Answer

Indirect costs, also known as overhead costs, need to be allocated to the cost object based on its usage of a chosen cost driver or drivers in order to determine the full cost of the object. Non-manufacturing costs may or may not be included depending on whether they are relevant to the specific cost object in question. Therefore, options A and C are incorrect. Option D is incorrect because there is a correct answer.

When Determining the Full Cost of a Cost Object