Commercial Applications
Indirect costs can be directly traced to a specific cost object, such as a product or department.
- True
- False
Cost
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Answer
False
Reason — Indirect costs, by definition, cannot be easily, directly and wholly traced to a specific cost object such as a product, job or department. They are common costs (overheads) that benefit several cost objects and therefore have to be apportioned/allocated using a suitable basis. Costs which can be directly traced to a cost object are called direct costs.
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Reason (R): Fixed costs are not dependent on the level of production.
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