What Determines the Difference Between a Direct and an Indirect

question 30

Multiple Choice

What determines the difference between a direct and an indirect cost?

• A)Whether it changes when activity levels change.
• B)Whether it is relevant to a particular decision.
• C)Whether it can be traced to a specific cost object.
• D)Whether it is related to manufacturing or nonmanufacturing activities.

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Definitions:

Actuarial Rate

The rate developed by actuaries based on statistical data, used in calculating insurance premiums and pension contributions.

Inflation Rate

The rate at which the general level of prices for goods and services is rising, and, subsequently, eroding purchasing power.

Personal Trusts

Legal arrangements where assets are held by a trustee for the benefit of another party, often used for estate planning, to manage wealth, or provide for beneficiaries according to the grantor's specifications.

Futures Contracts

Financial derivatives that obligate the buyer to purchase an asset or the seller to sell an asset at a predetermined future date and price.