Which of the Following Statements Is Correct in Relation to Determining

question 36

Multiple Choice

Which of the following statements is correct in relation to determining whether a cost is direct or indirect?

• A) The wider the definition of the cost object, the more costs that will be indirect costs.
• B) The number of cost items that can be classified as direct costs does not depend on the definition of cost objects.
• C) The narrower the definition of the cost object, the more costs that will be direct costs.
• D) The wider the definition of the cost object, the more costs that will be direct costs.

---

Definitions:

Installment Note Payment

A portion of a loan's repayment structure, where payments are spread out over time, typically including both principal and interest components.

Carrying Amount

The net value of an asset or liability reported on the balance sheet, calculated as the original cost minus depreciation, amortization, or impairment costs.

Federal Unemployment Taxes

Taxes imposed by the federal government on employers to fund state workforce agencies and unemployment compensation for workers who have lost their jobs.

Federal Income Taxes

Taxes imposed by the government on the annual earnings of individuals, corporations, trusts, and other legal entities.