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CMA Foundation · Fundamentals of Financial and Cost Accounting · Classification of Costs (CAS 1)

In a cost classification based on the ability of a manager to influence the amount incurred, a cost is called controllable when it:

A controllable cost is one that a specified manager can influence through their own decisions within a given period. Classification depends on authority and time, not on behaviour with output, traceability to products, or whether the cost is sunk.

  1. ACan be influenced by the action of a specified manager within a given periodCorrect
  2. BVaries in direct proportion to the volume of output
  3. CCan be traced to a single product without apportionment
  4. DWas incurred in the past and cannot be recovered

Explanation

Controllable costs are those whose amount can be influenced by a particular manager at a given level of authority within a given time. Proportionality to output relates to variable costs, traceability relates to direct costs, and unrecoverable past costs are sunk costs.

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