Which types of costs are jointly used by two or more cost objectives?

Jointly used costs are typically referred to as indirect costs. These costs cannot be traced directly to a single cost objective and are instead incurred to support multiple activities or projects. For example, administrative expenses, utilities, and facility maintenance costs are considered indirect because they benefit several programs or departments simultaneously.

The significance of indirect costs lies in their allocation across different cost objectives; this is essential for accurate budgeting and financial reporting, particularly in governmental and nonprofit organizations, where understanding the full cost of programs is critical for accountability and decision-making.

In contrast, fixed costs pertain to expenses that do not change with the level of output in the short term, while direct costs can be specifically traced to a particular program or cost objective. Opportunity costs refer to the value of foregone alternatives when resources are committed to a particular course of action, which is a different concept altogether. Thus, the identification of costs that support multiple objectives directly aligns with the definition of indirect costs.