
Concept explainers
(a)
Direct cost:
A cost indicates the payment of cash or the obligation to pay the cash in the future period for the generation of revenue or the service performed. A direct cost is the cost which is directly involved in the process of production. For example: The cost of plastic is the direct material for manufacturing a bottle.
Indirect cost:
An indirect cost is the cost which is indirectly involved in the process of production. For example: The salary of supervisor of a manufacturing business cannot be traced even though the supervisor contributes for the production.
Cost object:
A cost object is something to which costs are assigned, it is often a product lines or customers department for which costs are accumulated or measured by the management.
To explain: The most logical definition for the final cost object.
(b)
To classify: Each cost as either direct cost or indirect cost.

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Chapter 15 Solutions
Financial and Managerial Accounting - With CengageNow
- I am searching for the correct answer to this general accounting problem with proper accounting rules.arrow_forwardCan you help me solve this general accounting question using valid accounting techniques?arrow_forwardPlease provide the accurate answer to this general accounting problem using appropriate methods.arrow_forward
- Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
