Another cost classification that can be helpful in cost control indicates the co

Question

Another cost classification that can be helpful in cost control indicates the controllability of a cost item by a particular manager. If a manager can control or heavily influence the level of a cost, then that cost is classified as a controllable cost of that manager. Costs that a manager cannot influence significantly are classified as uncontrollable costs of that manager. Many costs are not completely under the control of any individual. In classifying costs as controllable or uncontrollable, managerial accountants generally focus on a manager’s ability to influence costs. The question is not, Who controls the cost? but, Who is in the best position to influence the level of a cost item? This exhibit lists several cost items, along with their typical classification as controllable or uncontrollable.

Explanation / Answer

Cost Control- Cost control is a technique to control the expenses and increase the profit.

Who controls the cost- Manager in the company, controls the cost. Manager who is appointed for taking care of cost aspects.

Who is in the best position to influence the level of a cost item?

Manager is the person who influence the level of a cost item. Cost is charged at each level of production. Some costs are controllable and some are not.

Controllable cost- It is the cost that can be controlled and altered for a period of time. Examples- Are as following-

Non controllable cost- It is the cost that is not in manager's hand and cannot be controlled. Examples- Are as following-

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.