Cost tracing is ________.
A) the assignment of direct costs to the chosen cost object
B) a function of cost allocation
C) the process of tracking both direct and indirect costs associated with a cost object
D) the process of determining the actual cost of the cost object

Question

Quizplus · Accepted Answer

Cost tracing involves the direct assignment of costs to a specific cost object, such as a product, service, or department. It involves identifying and measuring the costs incurred in producing or providing each unit of the cost object. This is different from cost allocation, which involves the indirect apportionment of costs to different cost objects based on a certain allocation base or cost driver. Cost tracing is essential for accurate product costing and decision-making.

Cost Tracing Is ________