Bhimani, Horngren,
Datar and Rajan,
Management and Cost Accounting, 5
th
Edition, Instructor’s Manual
© Pearson Education Limited 2012 Emphasise that a cost can be direct with
respect to one cost object, but indirect with respect to a different cost object. Consider a plant that produces several varieties of spaghetti sauce. Depreciation on the plant is direct with respect to the plant cost object but is indirect with respect to (i.e. cannot be traced directly to) the different sauce products. Depreciation on a machine used solely to make a particular type of spaghetti sauce is direct with respect
to that of product line, but indirect with respect to individual jars of sauce.
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