Question

Define the meaning of the term 'cost object' and provide three (3) examples of cost objects.

Answer 1

A cost object is any item, activity, or service for which costs are collected. It can be a product, department, or project.

Step-by-step explanation:

A cost object is any item, activity, or service for which costs are collected. It is something to which costs can be directly or indirectly traced. Cost objects can be products, services, departments, projects, or even individuals.

Here are three examples of cost objects:

1. Product: A cost object can be a specific product that a company manufactures or sells. For example, if a company produces different models of smartphones, each model would be a separate cost object.
2. Department: A cost object can be a specific department within a company. For instance, the marketing department, the production department, and the human resources department can all be cost objects.
3. Project: A cost object can be a specific project that a company undertakes. For instance, if a construction company is building a new bridge, that project would be a separate cost object.