Classifying a Cost as Either Direct or Indirect Depends Upon

question 34

Multiple Choice

Classifying a cost as either direct or indirect depends upon

• A)whether an expenditure is unavoidable because it cannot be changed regardless of any action taken.
• B)whether the cost is expensed in the period in which it is incurred.
• C)the behavior of the cost in response to volume changes.
• D)the cost object to which the cost is being relateD.This is the definition for classifying a cost as either direct or indirect.

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Definitions:

Financial Statements

Structured reports that detail the financial performance, position, and cash flows of a company, including the balance sheet, income statement, and cash flow statement.

Investing Activities

Financial transactions related to the acquisition or sale of long-term assets and other investments not classified as cash equivalents.

Operating Expenses

Costs necessary for a company to conduct its day-to-day business activities, excluding direct production costs.

Stock Investments

Investments in the capital stock of other corporations.