Traceability
ject in an economically feasible way by means of a causal relationship. The more costs
that can be traced to the object, the greater the accuracy of the cost assignments. Es-
tablishing traceability is a key element in building accurate cost assignments. One ad-
ditional point needs to be emphasized. Cost management systems typically deal with
many cost objects. Thus, it is possible for a particular cost item to be classified as both
a direct cost and an indirect cost. It all depends on which cost object is the point of
reference. For example, if the plant is the cost object, then the cost of heating and cool-
ing the plant is a direct cost; however, if the cost objects are products produced in the
plant, then this utility cost is an indirect cost.