Classifying a Cost as Either Direct or Indirect Depends Upon

question 95

Multiple Choice

Classifying a cost as either direct or indirect depends upon

• A)the behaviour of the cost in response to volume changes.
• B)whether the cost is expensed in the period in which it is incurred.
• C)whether the cost can be traced to the cost object.
• D)whether an expenditure is avoidable or not in the future.
• E)the inventory classification system.

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Definitions:

Marginal Revenue Curve

A graphical representation showing how marginal revenue varies with changes in quantity sold, often used to determine the optimal level of output for maximizing profit.

Perfectly Competitive

A market structure characterized by a large number of small firms, identical products, and free entry and exit which leads to firms earning normal profits in the long run.

Monopolist

A single seller in a market, who has significant control over the price and supply of a product.

Price Per Unit

The cost assigned to a single unit of a good or service.