Which of these is an indirect cost if the cost object is the servicing department of a motor vehicle dealership?
A) Rental of full site of business premises.
B) Wages of servicing mechanics.
C) Maintenance of servicing machinery.
D) Spare parts for the servicing of vehicles.

Question

Quizplus · Accepted Answer

Rental of the full site of business premises is an indirect cost because it cannot be directly linked to the servicing department. It benefits the entire dealership and therefore must be allocated among the different cost objects.

Note: Options B, C, and D are direct costs because they can be directly traced to the activity of the servicing department.

Which of These Is an Indirect Cost If the Cost