The determination of a cost as either direct or indirect depends upon the:
A)accounting system
B)allocation system
C)cost tracing system
D)cost object chosen

Question

Quizplus · Accepted Answer

The determination of a cost as either direct or indirect depends upon the cost object chosen. Direct costs are those that can be specifically and easily traced to a particular product, department or project. Indirect costs are those that cannot be traced to a particular product, department or project but are necessary for the overall operation of the business. Therefore, the choice of cost object will determine which cost is direct or indirect.

The Determination of a Cost as Either Direct or Indirect