Classifying a cost as either direct or indirect depends upon ________.
A) the behavior of the cost in response to volume changes
B) whether the cost is expensed in the period in which it is incurred
C) whether the cost can be traced to a particular cost object in an economically feasible way
D) whether a cost is fixed or variable

Question

Quizplus · Accepted Answer

Direct costs can be traced to a particular cost object in an economically feasible way, while indirect costs cannot be traced and allocated directly to a cost object. The behavior of a cost in response to volume changes (A) and whether a cost is expensed in the period in which it is incurred (B) are not definitive factors in determining whether a cost is direct or indirect. Whether a cost is fixed or variable (D) is also not a factor in determining whether it is direct or indirect.

Classifying a Cost as Either Direct or Indirect Depends Upon