What does classifying a cost as either direct or indirect depend upon?
A)Whether an expenditure is avoidable or not in the future
B)Whether the cost can be easily identified with the cost object
C)Whether the cost is expensed in the period in which it is incurred
D)The behaviour of the cost in response to volume changes

Question

Quizplus · Accepted Answer

Classifying a cost as either direct or indirect depend upon whether the cost can be easily identified with the cost object. Direct costs can be easily traced to the cost object, while indirect costs cannot be easily traced and need to be allocated or apportioned. Expendability, expensing, and volume changes are not relevant factors in determining whether a cost is direct or indirect.

What Does Classifying a Cost as Either Direct or Indirect