ACCA Applied Knowledge · Management Accounting · Budgetary control and reporting
A regional manager at Kestrel Ltd is assessed on a departmental budget report. Which of the following costs should be excluded when judging the manager's performance, because the manager cannot influence it?
Allocated head office rent is uncontrollable at departmental level because it is decided centrally and apportioned. Overtime, material wastage and stationery purchases are decisions the manager can influence, so they remain controllable and should be included when assessing the manager's performance.
- AOvertime paid to staff in the department the manager supervises
- BAllocated head office rent apportioned to the department by the finance directorCorrect
- CMaterials wastage in the department's production process
- DDepartmental stationery purchased on the manager's authority
Explanation
A controllable cost is one the manager can influence through their own decisions. Apportioned head office rent is set centrally, so the manager cannot control it. Overtime, wastage and stationery are all within the manager's authority.
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