Which of the following describes the term cost object?
A) Any type of cost which is incurred to produce a finished product
B) Any cost which is treated as a period expense
C) Anything which requires a detailed record of its component costs to be kept
D) An object which costs money to purchase

Question

Quizplus · Accepted Answer

A cost object refers to any item, product, service, or department for which costs are measured and assigned. It requires a detailed record of its component costs to be kept so that costs can be accurately allocated or traced to the object. Option A is incorrect as not all costs incurred results in the production of a finished product. Option B is incorrect as a cost object may be treated as a period or product cost depending on its relationship to the specific item being manufactured. Option D is incorrect as an object which costs money to purchase could be anything and it does not have to be a cost object.

Which of the Following Describes the Term Cost Object