Classifying a cost as either direct or indirect depends upon
A)the behaviour 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 the cost object.
D)whether an expenditure is avoidable or not in the future.
E)the inventory classification system.

Question

Quizplus · Accepted Answer

Direct costs can be traced to the cost object, while indirect costs cannot be easily traced to the cost object. The other options are not reliable determinants of whether a cost is direct or indirect.

Classifying a Cost as Either Direct or Indirect Depends Upon