The determination of a cost as being either direct or indirect depends upon
A) the accounting system.
B) the allocation system.
C) the cost tracing system.
D) the cost object chosen to determine its individual costs.

Question

Quizplus · Accepted Answer

The determination of a cost as being either direct or indirect depends upon the cost object chosen to determine its individual costs. If a cost can be easily identified and traced to a specific cost object, it is considered a direct cost. On the other hand, if a cost cannot be directly traced to a specific cost object, it is considered an indirect cost. The accounting system, allocation system, and cost tracing system are all tools and methods used to allocate and trace costs to cost objects, but they do not determine whether a cost is direct or indirect.

The Determination of a Cost as Being Either Direct or Indirect