The full cost of a cost object is:
A) total indirect costs divided by number of units.
B) none of the options are correct.
C) both its direct and indirect costs.
D) direct costs, indirect costs and manufacturing overhead.

Question

Quizplus · Accepted Answer

The full cost of a cost object includes both its direct and indirect costs. Direct costs are those that can be directly traced to the cost object, while indirect costs are those that are not directly traceable and need to be allocated based on a predetermined cost allocation method. Manufacturing overhead is a type of indirect cost that includes all the indirect costs incurred in the manufacturing process, such as rent, utilities, and maintenance. However, option D is incorrect as manufacturing overhead is a part of indirect costs and not a separate category. Option A is also incorrect as it only includes indirect costs, and not direct costs.

The Full Cost of a Cost Object Is