Direct costs of a cost object are costs related to that cost object that managers and management accountants can trace to it in an economically feasible (cost-effective)way.

Question

Quizplus · Accepted Answer

Direct costs can be easily and accurately traced to a cost object, such as a product, department, or project. This makes it possible for managers and management accountants to determine the true cost of the cost object and make informed decisions about pricing, production, and resource allocation. However, indirect costs (such as overhead expenses) cannot be easily traced to specific cost objects and require allocation methods to assign them to the appropriate cost object.

Direct Costs of a Cost Object Are Costs Related to That