Final answer:
Statement C) Direct costs are difficult to allocate accurately is not true because direct costs are known for being easily traceable and allocated to a specific cost object, unlike indirect or overhead costs.
Step-by-step explanation:
When considering the criteria for classifying costs as either direct or indirect, understanding their traceability relative to a specific cost object is essential. Direct costs can be easily traced to a product, service, or department, making them directly linked to output, while indirect costs, also called overhead costs, are not easily traceable to a single cost object, thereby generating difficulties in allocating them.
Looking at the provided options, statement A) Direct costs are easily traceable to a specific cost object is true, as it is the primary characteristic defining a direct cost. Following this logic, statement B) Indirect costs are also called overhead costs is also true, as it highlights the alternative term used for these costs. Statement D) Indirect costs cannot be linked to a particular cost object is likewise accurate, reflecting the inherent challenge in allocating overhead.
However, it is statement C) Direct costs are difficult to allocate accurately which is not true. The ease of identification and allocation of direct costs is what separates them from indirect costs. This distinction is important for accurate accounting and financial reporting in any business.
Therefore, the answer to the student's question, which asks for the statement that is not true concerning direct and indirect costs, is C) Direct costs are difficult to allocate accurately.