Question

For each of the following costs incurred at Northwest Hospital, indicate whether it would most likely be a direct cost or an indirect cost of the specified cost object.Cost Cost Object Direct Cost Indirect CostEx. Catered food served to patients A particular patient x 1. The wages of pediatric nurses The pediatric department 2. Prescription drugs A particular patient 3. Heating the hospital The pediatric department 4. The salary of the head of pediatrics The Pediatric department 5. The salary of the head of pediatrics A particular pediatric patient 6. Hospital chaplain's salary A particular patient 7. Lab tests by outside contractor A particular patient 8. Lab tests by outside contractor A particular department

Answer 1

Answer:

1.  Direct Cost

2. Direct Cost

3. Direct Costs

4. Direct Costs

5. Indirect Costs

6. Indirect Costs

7. Direct Costs

8. Indirect Cost

Explanation:

A cost object is where costs accumulates and the value needs to be determined.

Before classifying costs as direct or indirect it is very important to identify the cost object.

Direct costs can be traced directly through observation on the cost object whilst the Indirect costs can not be trace directly to the cost object.