Cost Terms

Question 1

Cost

Answer 1

A sacrificed or forgone resource to achieve a specific objective.

Question 2

Cost object

Answer 2

Anything for which a cost measurement is desired.

Question 3

Direct costs

Answer 3

Are related and can be traced to a cost object in an effective way.

Question 4

Indirect costs

Answer 4

Are related to a cost but can’t be traced in an effective way.

Question 5

Variable costing IS

Answer 5

Sales
- VC
= Total CM
- FC
= Profit