Which of the following regarding direct costs is a correct s

Which of the following regarding direct costs is a correct statement? O Direct costs are always fixed costs. O Direct costs are always variable costs. O Direct costs are easily traced to cost objects. O Direct costs are never selling and administrative expenses.

Solution

Direct costs are the expenses which can be directly attributed to a single cost object. Cost object may be a product, a department, a project, etc. Direct costs typically benefit a single cost object.

Direct cost can either be fixed or variable. For example, Raw Material is a variable direct cost but salary of the Supervisor of a particular department is a fixed direct cost.

Also, Selling and Administrative Expenses can be direct or indirect. For example, Shipping Chagres is a Selling expense and it also a direct cost.

Therefore, the correct answer is -

(C) Direct costs are easily traced to cost objects.