Be aware that a specific cost may be both a direct cost of one cost object and an
indirect cost of another cost object. That is, the direct/indirect classification depends on the
choice of the cost object. For example, the salary of an Assembly Department supervisor
at BMW is a direct cost if the cost object is the Assembly Department, but it is an indirect cost if the cost object is a product such as the BMW X5 sport-utility vehicle (SUV)
because the Assembly Department assembles many different models. A useful rule of
thumb is that the broader the definition of the cost object—the Assembly Department
rather than the X5 SUV—the higher the proportion of total costs that are direct costs
and the more confidence management has in the accuracy of the resulting cost
amounts.