Question

Classifying a cost as either direct or indirect depends upon​ ________. A. whether a cost is fixed or variable B. whether the cost can be easily traced with the cost object C. the behavior of the cost in response to volume changes D. whether the cost is expensed in the period in which it is incurred

Answer 1

Answer:

Classifying a cost as either direct or indirect depends upon B: whether the cost can be easily traced with the cost object

Explanation:

The classification of a cost as direct or indirect depends on the connection to the cost object. If the cost can be linked undeviatingly to the cost object, it is direct. On the contrary, if it can't be traced to the cost object it is indirect.

A. whether a cost is fixed or variable. Incorrect. A direct cost can be fixed or variable.

B. whether the cost can be easily traced with the cost object. Correct.

C. the behavior of the cost in response to volume changes. Incorrect. This is a variable cost (or fixed that changes in relevant range)

D. whether the cost is expensed in the period in which it is incurred. Incorrect.