Traceability- Traceability is the second classification because it is the ability to trace what a material has been purchased for and what department they go to. The two different ways a company can classify costs is directly or indirectly. Direct costs can be traced easily to a cost object. Whereas indirect costs cannot be easily traced to a cost object. Some examples of direct costs include material and labor cost for a product. Whereas some examples of indirect costs are maintenance expenses which benefits two or more departments