Which term describes costs that can be directly traced to a specific product?

The term that describes costs that can be directly traced to a specific product is "direct costs." These costs are directly associated with the production of a particular item or service, meaning they can be attributed specifically to that product without any allocation or estimation. Examples of direct costs include raw materials, labor directly involved in production, and manufacturing supplies that are used to create the product.

Understanding direct costs is crucial for businesses as they help in determining the actual cost of manufacturing a product, which directly impacts pricing and profitability analysis. In contrast, overhead costs refer to indirect expenses that cannot be directly linked to a single product, variable costs change with production levels, and fixed costs remain constant regardless of the level of production. These distinctions underscore the importance of recognizing direct costs for accurate financial reporting and decision-making in business operations.