Solutions to review questions 5.1 A cost item may change from being classified as an indirect cost to a direct cost (or vice versa) due to a change in the underlying operations – for example, the adoption of dedicated production lines. A change in information-gathering technology can also cause a cost item to change from being an indirect cost to a direct cost – for example, the use of bar codes and optical scanners. 5.2 The salary of a plant security guard would be a direct cost when the cost object is the security department or the plant. It would bean indirect cost when the cost object is a product. 5.3 Exhibit 5.1 in the text outlines four purposes for allocating costs
