Which statement correctly describes direct costs in project cost management?

• A. Direct costs cannot be traced to any deliverable.
• B. Indirect costs can be traced to a single deliverable.
• C. Direct costs can be traced to the project deliverables.
• D. Indirect costs are always lower than direct costs.

Answer: (C)

Direct costs are expenses that can be traced to a specific project deliverable or activity. This means every dollar spent directly supports creating that deliverable, such as the labor hours dedicated to it, the materials used, and tools or equipment allocated to it. Because these costs are identifiable with a particular output, they are assigned straight to that deliverable in the project cost baseline and tracked as the work progresses. That’s why the statement that direct costs can be traced to the project deliverables is the correct description. Indirect costs, on the other hand, are overhead that's shared across multiple deliverables and are allocated rather than traced to a single output, and the idea that indirect costs are always lower than direct costs isn’t necessarily true.