Which of the following statements is correct regarding direct and indirect costs?
A) Direct costs cannot easily be traced to a cost object, whereas indirect costs can be easily traced to a cost object.
B) Direct costs can be easily traced to a cost object, whereas indirect costs cannot be easily traced to a cost object.
C) Direct costs are always relevant to a particular cost decision, whereas indirect costs are never relevant to a cost decision.
D) Direct costs are never relevant to a particular cost decision, whereas indirect costs are always relevant to a cost decision.

Question

Quizplus · Accepted Answer

Direct costs can be traced to cost objects in a cost-effective manner. Indirect costs cannot be traced to objects in a cost-effective manner. Accountants use cost accumulation to determine the cost of a particular object. As a result, relevant costs can include direct and indirect costs.

Which of the Following Statements Is Correct Regarding Direct and Indirect