Cost objects include ______.

• A. only the salaries of top management
• B. products, departments, or projects for which costs are measured and assigned
• C. only the direct materials used in production
• D. only external financial statements

Answer: (B)

Verified step by step guidance

1. Understand the concept of 'cost objects': A cost object is anything for which costs are measured and assigned. This can include products, departments, projects, or any other segment of an organization where cost tracking is necessary.
2. Clarify the scope of cost objects: Cost objects are not limited to specific items like salaries of top management or direct materials. They encompass broader categories that help in cost allocation and management.
3. Recognize the purpose of cost objects: They are used to determine the cost of producing goods, running departments, or completing projects, which aids in decision-making and financial reporting.
4. Differentiate cost objects from external financial statements: External financial statements are prepared for stakeholders outside the organization and are not considered cost objects themselves.
5. Conclude that cost objects include products, departments, or projects for which costs are measured and assigned, as this aligns with the definition and purpose of cost objects in financial accounting.