Cost Object
Accounting glossary · Understand, connect, apply
A cost object is anything for which an organisation wants to measure cost. It may be a product, customer, service, department, project or activity.
Example
A courier measures the cost of one delivery route. Fuel used only on that route is traced directly, while the shared depot cost needs an allocation.
Remember the difference
The same cost can be direct to one object and indirect to another. A factory manager’s salary may be direct to the factory but indirect to an individual product.
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Published 4 November 2026. Prepared with AI assistance; examples are fictional and simplified for learning.
Examples are simplified for learning. Where a term depends on US law, IFRS, US GAAP or a historical rule, check the context explained above and the requirements relevant to your course.
Study references: OpenStax financial accounting and managerial accounting. For reporting requirements, consult the applicable IFRS Standards or FASB guidance. US tax terms should be checked against the relevant tax-year IRS instructions.
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