We Define Cost Tracing As

question 112

Multiple Choice

We define cost tracing as:

• A)the assignment of direct costs to a chosen cost object.
• B)a function of cost allocation.
• C)the process of tracking both direct and indirect costs associated with a cost object.
• D)the process of determining the actual cost of the cost object.
• E)the process of tracking only the direct and indirect costs.

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Definitions:

Spending Variance

The difference between the budgeted or planned amount of expenditure and the actual amount spent.

Static Planning Budget

A budget based on a fixed level of activity and does not change in response to variations in activity levels, offering a baseline for performance evaluation.

Flexible Budget

A budget that adjusts or flexes with changes in the volume or activity level, making it more useful for controlling costs and operational efficiency.

Net Operating Income

The profit generated from a company's operations, excluding non-operating income and expenses like interest and taxes.