ACCA Applied Knowledge · Management Accounting · Budgetary control and reporting
Which of the following is the best description of a controllable cost in the context of responsibility accounting?
A controllable cost is one that a specified manager can significantly influence by their own decisions within the period. Whether a cost is fixed, direct or budgeted describes behaviour, traceability or planning, not who can control it, so those descriptions do not define controllability.
- AA cost that a specified manager can significantly influence through their own decisions within a given periodCorrect
- BA cost that does not change when the level of activity changes
- CA cost that can be traced directly to a single cost unit
- DA cost that is included in the original budget
Explanation
A controllable cost is one whose amount can be significantly influenced by the manager responsible, usually within the budget period. Fixed cost behaviour and direct traceability are different classifications. Inclusion in the budget does not make a cost controllable.
Did you get it right without looking?
One question tells you little. A timed set on Budgetary control and reporting shows your real accuracy, how long you take and where you lose marks.
More Budgetary control and reporting questions
- A regional manager at Kestrel Ltd is assessed on a departmental budget report. Which of the following costs should be excluded when judging …
- Brandt Ltd's Assembly department budgeted 10,000 units at a variable cost of $12 per unit and fixed costs of $50,000, of which $20,000 is an…
- Budgeted output was 8,000 units with variable costs of $6 per unit and fixed costs of $20,000. Actual output was 9,000 units and total actua…
- Delta Co budgeted sales of 8,000 units at $25 each. Actual sales were 8,500 units at $24 each. What is the total sales revenue variance?
- Budgeted production was 5,000 units with variable costs of $4 per unit and fixed costs of $18,000. Actual production was 6,000 units, with a…
- Hollis Co budgeted to produce 5,000 units with variable costs of $8 per unit and fixed costs of $30,000. Actual production was 6,200 units a…