Direct Costs Do Not Have a Cause and Effect Relationship

question 46

True/False

Direct costs do not have a cause and effect relationship with the cost object.

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Definitions:

Outsourced Function

A task or operation that is performed by external parties rather than by in-house staff.

In-house

Referring to activities or operations that are carried out within an organization by its own members or resources, rather than being outsourced.

Outsourcing Arrangements

Agreements where one company hires an external party to perform services or create goods that traditionally were performed in-house.

Cost Savings

Reductions in expenses, achieved through efficiency improvements, negotiation, or eliminating wasteful practices, contributing to an organization's financial health.