If we are determining costs for a particular case at a law office, the cost of rent for the office would be: A. An irrelevant cost B. An indirect cost C. A direct cost D. A mixed cost

Question

Business

Jax Horne

28 September, 11:52

If we are determining costs for a particular case at a law office, the cost of rent for the office would be: A. An irrelevant cost B. An indirect cost C. A direct cost D. A mixed cost

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Answers (1)

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Evelin Burns · Answer 1

The correct answer is B. An indirect cost.

Explanation:

The indirect cost is that which affects the production process of one or more products that a company sells, and that cannot be measured and assigned directly to one of the productive stages or to a specific product, but it is necessary to assume a consistent allocation criteria.

That is, an indirect cost affects several products and to assign this cost to each product it is necessary to ask the following question: How could I distribute this cost among the units I produce? When you produce a car you know that it is necessary to put 4 wheels, but ... do you know how much electricity you need in the production of each car? This is the main difference with the direct cost, since the direct costs can be associated very clearly to the final product and without the need to establish an imputation criterion.