A cost that is found to bear an observable and known relationship to a quantifiable activity base is a(n)
A)discretionary cost.
B)product cost.
C)period cost.
D)engineered cost.

Question

Quizplus · Accepted Answer

An engineered cost is a cost that can be traced to a certain activity or cause, and it has an observable and known relationship to a quantifiable activity base. Examples of engineered costs include direct materials, direct labor, and overhead costs that can be traced to a specific unit of production, such as machine hours or labor hours. Discretionary costs are those that are not directly tied to any activity or product, such as research and development or advertising expenses. Product costs are those that are directly related to the production of goods or services, such as raw materials or direct labor. Period costs are those that are not directly related to the production of goods or services, such as administrative and selling expenses.

A Cost That Is Found to Bear an Observable and Known