[amp_mcq option1=”each department” option2=”each unit of output” option3=”each month” option4=”each executive” correct=”option2″]
The correct answer is: B. each unit of output.
Direct costs are costs that can be easily traced to a specific product or service. They are incurred in the production of a good or service and can be easily identified with a particular unit of output. Examples of direct costs include direct materials, direct labor, and direct expenses.
Indirect costs are costs that cannot be easily traced to a specific product or service. They are incurred in the overall production process but cannot be easily identified with a particular unit of output. Examples of indirect costs include indirect materials, indirect labor, and indirect expenses.
A. Each department is not a correct answer because direct costs can be identified with each unit of output, not each department.
C. Each month is not a correct answer because direct costs can be identified with each unit of output, not each month.
D. Each executive is not a correct answer because direct costs can be identified with each unit of output, not each executive.