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

Sharma Textiles has a spinning department. For its manager, which of the following is most clearly a non-controllable cost?

The allocated head-office administration charge is non-controllable for the spinning department manager because it is fixed and apportioned by the corporate office, outside the manager's authority. Stores, overtime and repairs are decided by the manager and are therefore controllable.

  1. AStores consumed in the department, requisitioned by the manager
  2. BOvertime wages approved by the manager
  3. CShare of head-office administration charges allocated by the corporate officeCorrect
  4. DRepairs ordered by the manager from the department budget

Explanation

Head-office charges are allocated by the corporate office and the department manager has no power to change them, so they are non-controllable for that manager. Stores, overtime and repairs are decided within the manager's authority, so they are controllable.

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