The determination of a cost as being either direct or indirect depends upon
A)the accounting system.
B)the allocation system.
C)the cost tracing system.
D)only the cost object chosen to determine its individual costs.
E)the choice of the cost object, and the materiality of the cost in question.

Question

Quizplus · Accepted Answer

The determination of a cost as being either direct or indirect depends on the choice of the cost object and the materiality of the cost in question. Direct costs are those that can be easily traced to a specific cost object, while indirect costs cannot be easily traced to a specific cost object. The choice of the cost object and the materiality of the cost in question can affect whether a cost is classified as direct or indirect. Therefore, option E is the best choice.

The Determination of a Cost as Being Either Direct or Indirect