Indirect costs cannot be traced directly to specific cost objects

Steps:

• Recall that costs are classified as direct or indirect based on traceability to cost units (e.g., products) or centers (e.g., departments).
• Direct costs, like materials for a product, can be traced easily; indirect costs, like factory rent, cannot.
• Review choices: A matches the traceability definition; B describes variable costs; C relates to controllability; D describes fixed costs.
• Eliminate B, C, D as they define other cost behaviors, not indirectness.

Why A is correct:

• Indirect costs are defined in cost accounting as those not directly traceable to individual cost units or centers, requiring allocation methods like overhead rates.

Why the others are wrong:

• B: Describes variable costs, which fluctuate with activity but can be direct (e.g., direct labor) or indirect.
• C: Relates to controllable vs. uncontrollable costs, independent of direct/indirect classification.
• D: Defines fixed costs, which stay constant regardless of activity and can be indirect (e.g., salaries).

Final answer: A