LO $1-1$ Understand cost classifications used for assigning costs to cost objects: direct costs and indirect costs.

We will discuss the differences between direct and indirect costs. A direct cost is a cost that can be easily and conveniently traced to a cost object. An indirect cost is a cost that cannot be easily and conveniently traced to a cost object. A common cost is a type of an indirect cost. A particular cost may be direct or indirect, depending on the cost object.