Which of the following statements best describes an indirect cost?
A) An indirect cost can be easily and accurately traced to a cost object.
B) An indirect cost is assigned to a cost object using allocation.
C) It is not important to assign an indirect cost as it can be traced to a cost object.
D) None of these statements are true.

Question

​Which of the following statements best describes an indirect cost?
A) An indirect cost can be easily and accurately traced to a cost object.
B) An indirect cost is assigned to a cost object using allocation.
C) It is not important to assign an indirect cost as it can be traced to a cost object.
D) None of these statements are true.

Quizplus · Accepted Answer

Indirect costs are costs that cannot be easily or accurately traced to a cost object, such as a specific product or service. Instead, these costs are allocated or apportioned to cost objects using a cost allocation method, such as predetermined overhead rates or activity-based costing. Therefore, statement B is the best description of an indirect cost. Statements A and C are incorrect, as they describe direct costs that can be easily traced or don't need to be allocated. Statement D is also incorrect, as statement B is true.

​Which of the Following Statements Best Describes an Indirect Cost

Which of the Following Statements Best Describes an Indirect Cost