Question

Indirect costs can be directly traced to a specific cost object, such as a product or department.

Options

• True

• False

Answer 1

False

Explanation:

Indirect costs cannot be directly or easily traced back to a specific cost object, such as a single product or department, because they are collective overheads that benefit numerous parts of an organization. These expenses, such as factory rent or general administration pay, must be allocated or apportioned logically rather than directly tracked.