Some Costs That Possibly Could Be Traced Directly to Cost

question 115

Multiple Choice

Some costs that possibly could be traced directly to cost objects are nonetheless classified as indirect costs because:

• A) Such costs cannot be traced to objects in a cost-effective manner.
• B) Such practice results in a more accurate accumulated cost for the object.
• C) Generally accepted accounting principles require some costs to be treated as indirect.
• D) All of these answers are correct.

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Definitions:

Coupon

The interest rate disbursed annually on a bond, indicated as a percent of its face value.

Bond Price

Bond price is the present value of a bond's future interest payments and its redemption value at maturity, which fluctuates with interest rates and the bond's credit rating.

Tax Exempt Equivalent Yield

A calculation that determines the return needed on a taxable bond to make it equivalent to the yield on a tax-exempt bond, factoring in the investor's tax rate.

Marginal Tax Rate

The amount of tax paid on an additional dollar of income.