In a given scenario, if the cost is considered as indirect cost then independent variable will be considered as _________?
Correct answer: C. cost allocation base
- A. demand allocation base
- B. supply allocation base
- C. cost allocation base
- D. price allocation base
Explanation
Indirect costs cannot be traced economically to one product or service, so they are assigned using a cost allocation base such as labour hours or machine hours. The other bases are not standard accounting terms for this purpose.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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