The distinction between direct and indirect costs depends on whether a cost
A)is controllable or non-controllable.
B)is variable or fixed.
C)can be conveniently and physically traced to a cost object under consideration.
D)will increase with changes in levels of activity.

Question

Quizplus · Accepted Answer

Direct costs are those that can be easily and physically traced to a specific cost object, while indirect costs are allocated to a cost object through an allocation process. Therefore, the distinction between direct and indirect costs depends on whether a cost can be conveniently and physically traced to a cost object under consideration. Controllability, variability, or responsiveness to changes in activity levels, are not the main factors that determine whether a cost is classified as direct or indirect.

The Distinction Between Direct and Indirect Costs Depends on Whether