ACCA Applied Knowledge · Management Accounting · Budgetary control and reporting
Which of the following best describes a controllable cost in the context of budgetary control reporting?
A controllable cost is one that can be influenced by the manager responsible for the budget. Controllability depends on the manager's authority, not on cost behaviour or traceability, so fixed, direct or variable costs may or may not be controllable.
- AA cost that is fixed within the relevant range
- BA cost that can be influenced by the manager responsible for the budgetCorrect
- CA cost that can be traced directly to a cost unit
- DA cost that varies in line with activity levels
Explanation
A controllable cost is one whose level a particular manager can significantly influence within the period. Fixed, direct and variable are classifications by behaviour or traceability, not controllability. Reports to managers should focus on controllable items.
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