Direct versus indirect costs Kenta and Associates, LLP, is an accounting firm that provides two major types of professional services: (1) tax services as provided by the tax department and (2) auditing services as provided by the audit department. Each department has numerous clients. Engagement with each individual client is a separate service (i.e., product) and each department has several engagements in each period. Cost items of the firm follow: 

Secretarial labor supporting both departments 

Professional labor for an audit engagement 

Depreciation of computers used in the audit department

Salary of the partner in charge of the tax department 

Travel expenditures for an audit engagement 

Salary of the partner in charge of the audit department 

Salary of the managing partner of the firm 

Cost of office supplies such as paper, pencils, erasers, etc. 

Depreciation of computers used in the tax department 

License fees of the firm 

Professional labor for a tax engagement 

Required

a. Identify each cost as being a direct or indirect cost assuming the cost objects are the individual engagements (audit engagements or tax engagements).

b. Identify each cost as being a direct or indirect cost assuming the cost objects are the two departments.

c. Identify each cost as being a direct or indirect cost assuming the cost object is Kenta and Associates, LLP, as a whole.