Which of the Following Statements Is Correct Regarding Direct and Indirect

question 5

Multiple Choice

Which of the following statements is correct regarding direct and indirect costs?

• A) Direct costs cannot easily be traced to a cost object, whereas indirect costs can be easily traced to a cost object.
• B) Direct costs can be easily traced to a cost object, whereas indirect costs cannot be easily traced to a cost object.
• C) Direct costs are always relevant to a particular cost decision, whereas indirect costs are never relevant to a cost decision.
• D) Direct costs are never relevant to a particular cost decision, whereas indirect costs are always relevant to a cost decision.

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Definitions:

Total Revenue

The total amount of money generated by the sale of goods or services related to the company's primary operations.

Assistant's Salary

The compensation provided to an assistant, which could vary based on industry, role, experience, and location.

Economic Profit

The delta between aggregate sales and all-inclusive costs, factoring in both overt and covert costs.

Own Capital

The personal funds contributed by the owners or shareholders to a business for startup or expansion, representing equity in the firm.