Question

Indirect costs are traced to cost objects.

Answer 1

Answer:

Explanation:

The following statement is false and true

1. Indirect costs are traced to cost objects - This statement is false because it is not directly traced to the cost objectives. It is traced through the cost drivers.  

2. Yes, this statement is true because the cost drivers are used to allocate the indirect cost to their cost objects

3. Yes, this statement is true because for computing the allocation rate, we have to divide the total allocation cost to its allocation base

4.  Yes, this statement is true because the cost drivers play very important for cost allocation. Without cost drivers, the allocation of the cost would not be possible

5. This statement is false because depreciation should be allocated based on its useful life  rather than the number of square feet because the number of square feet occupied is used to allocate the renting cost