A direct cost is a cost that is:
A) Identifiable as controllable.
B) Variable with respect to the volume of activity.
C) Fixed with respect to the volume of activity.
D) Traceable to a cost object.
E) Sunk with respect to a cost object.

Question

Quizplus · Accepted Answer

A direct cost is a cost that can be specifically attributed to a particular cost object such as a product, service or department. In other words, it is a cost that can be traced to a particular cost object in an economically feasible way. Therefore, Choice D (Traceable to a cost object) is the best choice. Choices A, B, C, and E do not clearly define a direct cost.

A Direct Cost Is a Cost That Is