When evaluating profitability of a segment,costs that are directly identifiable with a specific segment are called:
A)Direct costs.
B)Common costs.
C)Indirect costs.
D)Fixed costs.

Question

Quizplus · Accepted Answer

Direct costs are costs that can be specifically attributed to a particular segment, such as the cost of materials, labor or rent exclusively used for that segment. Common costs are those that are shared among multiple segments and cannot be assigned to a specific segment. Indirect costs are costs that are not directly identifiable with any particular segment, such as advertising or administrative costs. Fixed costs are costs that remain the same regardless of the volume of production.

When Evaluating Profitability of a Segment,costs That Are Directly Identifiable