Question

In process costing, the classification of materials as direct or indirect depends on whether or not they are clearly linked with a specific process or department. True or False

Answer 1

The statement is: True.

Step-by-step explanation:

Direct costs are those that can be allocated to the production of a good and. Direct costs are traceable and can be measured per unit produced. Examples of direct costs are direct labor, raw materials, and supplies. Indirect costs are important for the production of a good but do not participate directly in the manufacturing process such as rent, power service, security services, and administrative wages.

Thus, the process and departments of the costs influence whether they are going to be labeled as indirect or direct.