The Classification of a Cost as Either Direct or Indirect

question 27

Multiple Choice

The classification of a cost as either direct or indirect depends primarily on:

• A) the type of business.
• B) the computer tracing system within the organisation.
• C) the definition of the cost object.
• D) the knowledge of the accountant.

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Definitions:

Equity Multiplier

A financial leverage ratio that shows the proportion of a company's assets that are financed by shareholder's equity.

Earnings Per Share

A financial metric that indicates the portion of a company's profit allocated to each outstanding share of common stock, providing an indicator of the company's profitability.

Price-Earnings Ratio

is a measure of a company's current share price relative to its per-share earnings, used to evaluate if a stock is undervalued or overvalued.

Times Interest Earned

A financial ratio that measures a company's ability to meet its interest payments on outstanding debt, calculated by dividing earnings before interest and taxes (EBIT) by the interest expense.