Indirect Costs Are Usually Allocated Rather Than Traced to Cost

question 63

Multiple Choice

Indirect costs are usually allocated rather than traced to cost objects because

• A)allocation is required by external reporting requirements.
• B)overall accuracy is improved by allocation.
• C)no causal relationship exists between indirect costs and the cost object.
• D)allocation is more convenient than tracing.

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Definitions:

Monthly Payment

A fixed amount of money paid on a regular monthly basis for a wide range of financial obligations, including loans or rent.

Sub-prime Loan

A loan offered to individuals with poor credit histories or higher risk of default than prime borrowers, often at a higher interest rate.

Prime Rate

The interest rate that commercial banks charge their most credit-worthy customers, often used as a benchmark for other rates.

Credit Worthiness

An assessment of a borrower's ability to repay a loan or debt based on their financial history and current status.