Cost D can be physically traced to each unit of output. It should be classified as...

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Cost D can be physically traced to each unit of output. It should be classified as a direct cost with respect to each unit of output. Cost I can be physically traced to each unit of output. It should be classified as an indirect cost with respect to each unit of output. Which of the following statements about the classification of D and I is most likely to be true? 1. Misclassifying D as an indirect cost would have a more negative impact on the accuracy of cost assignment (to each unit of output) compared to misclassifying I as a direct cost. 2. Misclassifying D as an indirect cost would have a less negative impact on the accuracy of cost assignment (to each unit of output) compared to misclassifying I as a direct cost. 3. Misclassifying D as an indirect cost would have the same negative impact on the accuracy of cost assignment (to each unit of output) as misclassifying I as a direct cost. Statement 1 only O Statement 2 only Statement 3 only Cost D can be physically traced to each unit of output. It should be classified as a direct cost with respect to each unit of output. Cost I can be physically traced to each unit of output. It should be classified as an indirect cost with respect to each unit of output. Which of the following statements about the classification of D and I is most likely to be true? 1. Misclassifying D as an indirect cost would have a more negative impact on the accuracy of cost assignment (to each unit of output) compared to misclassifying I as a direct cost. 2. Misclassifying D as an indirect cost would have a less negative impact on the accuracy of cost assignment (to each unit of output) compared to misclassifying I as a direct cost. 3. Misclassifying D as an indirect cost would have the same negative impact on the accuracy of cost assignment (to each unit of output) as misclassifying I as a direct cost. Statement 1 only O Statement 2 only Statement 3 only

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Answer The correct answer is Statement 1 Only Explaination Cost D is direct c... View the full answer