Costs may be directly or indirectly associated with cost objects.

Question

Quizplus · Accepted Answer

Costs can be directly associated with cost objects when they are specifically and uniquely identified and traced to a cost object, such as direct materials or direct labor. Indirect costs, on the other hand, are not directly traceable to a specific cost object but are allocated based on a reasonable basis such as activity-based costing or allocation of overhead costs.

Costs May Be Directly or Indirectly Associated with Cost Objects