Companies with Higher Direct Costs in Relation to Indirect Costs

question 106

True/False

Companies with higher direct costs in relation to indirect costs are more suitable for activity-based costing.

---

Definitions:

Wage Expenses

The total cost incurred by a company for the payment of wages to its employees.

Indirect Expenses

Costs that are not directly traceable to a specific cost object, such as the production of goods or services.

Decentralization

The distribution of decision-making power away from a central authority within an organization to lower levels or divisions.

Controllable Costs

Expenses that management can directly or indirectly control or influence in the short term, such as supplies and advertising.