In: Accounting
Discuss the term cost object in the four level of indirect costs with in ABC system?
Answer:
A cost object is anything for which a different estimation of expenses/costs is wanted.Exampes incorporate an item, a service, an undertaking, a client, a brand category, an operation, and a division.
Cost bearers are in the ABC phrasing called cost objects. Instances of cost objects are clients, groups of clients, item groups, and orders. Consequently the term is firmly adjusted to what exactly is customarily alluded to as division of direction. Like cost bearers, the cost items can be half-produced items and items that are exchanged inside in the firm.
A reasonable association between the cost centers and cost bearers compares to the making of a rational linkage between cost pools and cost objects. In any case, it isn't implying that the cost pools and cost objects are to be joined individually, the cost pools are excessively expansive for that. The particular cost pool is to be disseminated to a few cost objects, and therefore ABC can be considered through a refined appropriation key, probably less subjective/arbitrary than the conventional models.