The following statements are correct excerpt? A. Both direct and indirect costs are exclusively traced to cost object in the same way B. Cost allocation occurs when quantity of resources consumed by a particular cost object cannot be directly measured C. Different costs are used for different purposes D. Costing systems vary depending on the level of sophistication for cost assignment
Question
The following statements are correct excerpt? A. Both direct and indirect costs are exclusively traced to cost object in the same way B. Cost allocation occurs when quantity of resources consumed by a particular cost object cannot be directly measured C. Different costs are used for different purposes D. Costing systems vary depending on the level of sophistication for cost assignment
Solution 1
A. Both direct and indirect costs are exclusively traced to cost object in the same way: This statement is incorrect. Direct costs are traced directly to a cost object, while indirect costs are allocated to a cost object using a predetermined allocation method.
B. Cost allocation occurs when the quantity of resources consumed by a particular cost object cannot be directly measured: This statement is correct. Cost allocation is used when it is not possible to directly measure the quantity of resources consumed by a cost object.
C. Different costs are used for different purposes: This statement is correct. Different costs, such as variable costs, fixed costs, and opportunity costs, are used for different purposes in cost analysis and decision-making.
D. Costing systems vary depending on the level of sophistication for cost assignment: This statement is correct. Costing systems can vary in their level of sophistication and complexity for assigning costs to cost objects. Different organizations may use different costing systems based on their specific needs and requirements.
Solution 2
A. Both direct and indirect costs are exclusively traced to cost object in the same way: This statement is incorrect. Direct costs are traced directly to a cost object, while indirect costs are allocated to a cost object using a predetermined allocation method.
B. Cost allocation occurs when the quantity of resources consumed by a particular cost object cannot be directly measured: This statement is correct. Cost allocation is used when it is not possible to directly measure the quantity of resources consumed by a cost object.
C. Different costs are used for different purposes:
Similar Questions
Which of the following statements about cost allocation is incorrect? a. Step-down method does not fully recognise the mutual dependenciesbetween support departments B.To ensure fairness, the same cost driver should be used to allocate costsfor all indirect cost pools. c. A cost may be considered an indirect cost even if it has a one-on-onerelation to the cost object, because the benefit of tracing this cost is toosmall. D. A cost can be direct or indirect cost depending on the cost object ofinterest. E. A training program offered by the human resource department can be a cost object.
Which statement correctly describes a direct cost?
Indirect costs are:Question 2Answera.Costs that can be directly attributed to the production of goodsb.Costs that cannot be easily traced to a specific cost objectc.Fixed costs that remain constant regardless of activity levelsd.Easily traceable to a specific cost object
Which definition best describes indirect costs? Indirect costs are those costs which are not controlled directly by a manager Indirect costs are those costs which cannot be directly associated with a product or service. Indirect costs are always fixed. Indirect costs are always manufacturing overhead costs.
Which of the following statements regarding overhead costs is not true? A. Overhead costs might be traceable to an individual cost object but it is not cost effective to do so. B. Overhead costs are only allocated to a single cost object. C. Overhead costs are also known as indirect costs. D. All of the statements about overhead costs are true.
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.