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A cost incurred for the benefit of more than one cost objective is known as a Common cost
common cost
COMMON COST
Indirect Cost ---------(Common Cost)
variable cost is a cost volum relationship but direct or indirect cots is a tracing relationship thus the cost that can not be traced to the final cost object is an indirect cost and if it serves more than one cost object it is a common cost and the general rule is that all indirect costs that serve more than cost object are common costs
Indirect Costs are:
a. Costs that have been incurred for common or joint
purposes.
b. Costs that benefit more than one cost objective
and cannot be readily identified with a particular
final cost objective without effort disproportionate
to the results achieved.
Common cost
