COST ACCOUNTING
INTRODUCTION TO COST ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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can be accurately traced to a product
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are significant in the production process
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are incurred in a specific period
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include only purchase of materials
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Detailed explanation-1: -A direct cost is a price that can be directly tied to the production of specific goods or services. A direct cost can be traced to the cost object, which can be a service, product, or department. Direct costs examples include direct labor and direct materials.
Detailed explanation-2: -Actual costing: traces direct costs to a cost object by using the actual direct-cost rate(s) times the actual quantity of the direct-cost input(s) and allocated indirect costs based on the actual indirect-cost rate(s) times the actual quantity of the cost-allocation base.
Detailed explanation-3: -Direct costs are the expenses a business incurs directly to make a product or service, or buy a wholesale product for resale. (All other costs are considered to be indirect costs.)
Detailed explanation-4: -(1) Direct costs are costs that can be traced easily and accurately to a cost object. (2) Indirect costs are costs that cannot be traced easily and accurately to a cost object.
Detailed explanation-5: -Direct costs (also known as costs of goods sold-COGS) are the costs that can be completely attributed to the production of a specific product or service.