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Could you please explain why in the following question a manager is not a cost object and why a customer is considered as a cost object.
Which of the following is not a cost object.
A. A Customer
B. A Manager
C. A product
D. A cost centreA business has lots of costs – if they are producing goods there are the costs of the materials, the labour etc., if they are giving a service (like a hotel) then again there are lots of costs (labour, repairs to the building etc). The cost of a manager in the business is one of these costs.
A cost object is something they want to allocate these costs to. A production company wants to calculate the cost of producing a unit (so that they can decide on a selling price, so that they can look at reducing costs). A hotel wants to know the cost of dealing with one customer (so that again they can decide how much to charge and can look at ways of reducing costs).
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