Which costs can be directly attributed to a cost objective?

Direct costs are expenses that can be directly traced to a specific cost objective, such as a project, department, or service. These costs can be easily identified and quantified in relation to the object they are associated with. For instance, the salaries of employees who work directly on a specific project, or the materials and supplies used exclusively for that project, fall into this category. Being able to attribute these costs directly aids in accurate budgeting, forecasting, and financial reporting for that specific cost objective.

In contrast, indirect costs cannot be traced directly to a single cost objective, as they support multiple projects or activities and are not easily allocated to a specific area. Variable costs change with the volume of activity, while fixed costs remain constant regardless of activity level, but both can include both direct and indirect components. Therefore, they do not fit the criteria of direct association with specific cost objectives like direct costs do.