Since indirect cost cannot be conveniently or economically traced directly to a cost pool or cost object, the management accountant will:
A)Assign them by means of cost allocation.
B)Assign them where needed.
C)Assign them randomly to even out these costs.
D)Not assign them at all.
E)None of the above.

Question

Quizplus · Accepted Answer

Indirect costs cannot be traced directly to a cost pool or cost object, so they must be assigned by means of cost allocation. Cost allocation involves using a reasonable and consistent method to assign indirect costs to the cost pools or cost objects that benefit from them. This allows for a more accurate determination of the true cost of producing a product or delivering a service. Therefore, assigning indirect costs by means of cost allocation is the best choice.

Since Indirect Cost Cannot Be Conveniently or Economically Traced Directly