Question

Regardless of the system used in departmental cost analysis: Multiple Choice Neither direct nor indirect costs...

Regardless of the system used in departmental cost analysis:

Multiple Choice

  • Neither direct nor indirect costs are allocated.

  • Direct costs are allocated, indirect costs are not.

  • Both direct and indirect costs are allocated.

  • Total departmental costs will always be the same.

  • Indirect costs are allocated, direct costs are not.

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Answer #1

Solution:

Regardless of the system used in departmental cost analysis, "Indirect costs are allocated, direct costs are not". Because direct cost are directly related they are not required to be allocated. On the other hand, indirect cost cannot be traced directly therefore they are required to be allocated.

Hence last option is correct.

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