Which of the following is true of indirect costs?
A) Indirect costs are always considered sunk costs.
B) All indirect costs are included in cost of goods sold.
C) Indirect costs always vary in direct proportion to the level of production.
D) Indirect costs cannot be traced to a particular cost object in an economically feasible way.

Question

Quizplus · Accepted Answer

Indirect costs refer to costs that cannot be traced to a particular cost object in an economically feasible way. These costs are often referred to as overhead costs and include expenses such as rent, utilities, and administrative salaries. It is not necessary that indirect costs are always sunk costs, nor are they included in cost of goods sold. The level of production may impact the amount of indirect costs, but they do not vary in direct proportion.

Which of the Following Is True of Indirect Costs