The term which describes the assigning of indirect cost, to any cost object is classified as ___________?
Correct answer: A. cost allocation
- A. cost allocation
- B. sales tracing
- C. sales allocation
- D. cost tracing
Explanation
Cost allocation assigns an indirect cost to a cost object using a reasonable allocation base because the cost cannot be traced directly. Tracing is normally used for direct costs that can be specifically identified.
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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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