In general, many more costs are direct when a department is the cost objective than when a product or service is the cost objective.

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When a department is the cost objective, costs such as salaries, benefits, and supplies are directly attributable to that department. However, when a product or service is the cost objective, indirect costs such as rent, utilities, and depreciation must also be allocated to that product or service. Therefore, there are generally more direct costs associated with a department as the cost objective compared to a product or service.

In General, Many More Costs Are Direct When a Department