COST OBJECT: Cost Object is defined as anything for which cost data is desired. For example, cost object can be a product, an activity, a department, a customer, a geographical region etc.

Direct cost: This is a cost that can be traced directly, conveniently, and economically to a cost object. Examples, direct material, direct labor.

Indirect Cost: This is a cost that cannot be traced directly, conveniently or economically to a cost object. Examples, screws, rivets, glue, oils, wages of security guards, landscaping, property taxes, insurance, lighting, etc. These costs are also generally referred to as overhead costs.

Your class had a fictional field trip to a factory called Abel Furniture that manufactures furniture. At Abel Furniture, identify:

1. A convenient cost object

2. Three types of materials that can be identified as direct costs given your cost object

3. Three types of labor that can be identified as direct costs given your cost object

4. Three types of indirect costs