The materiality of the cost is a factor in classifying the cost as a direct or indirect cost.

Question

Quizplus · Accepted Answer

The materiality of a cost refers to its significance or importance in relation to the overall cost structure of the product or service being produced. If a cost is significant enough to influence the final cost of the product or service, it is considered a direct cost. On the other hand, if a cost is not significant enough to influence the final cost of the product or service, it is considered an indirect cost. Therefore, the materiality of the cost is a factor in classifying the cost as direct or indirect.

The Materiality of the Cost Is a Factor in Classifying