Controllable Cost and uncontrollable Costs

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A Controllable cost is "a cost which can be influenced by its budget holder"

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How is Controllable Cost and uncontrollable Costs

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Responsibility accounting attempts to connect costs, revenues, assets and liabilities with the employer most capable of controlling them. As a ideas of accounting, it therefore distinguishes in the middle of control and uncontrolled costs.

o Most changeable costs within a group are thought to be controllable in the short term because employer can sway the efficiency with which resources are used, even if they cannot do anything to rise or lower price levels.

o Many fixed costs are uncontrollable (or committed) in the short term, although some fixed costs may be discretionary.

o Many fixed costs are directly attributable to a group or behalf town in that although they are fixed (in the short term) within the relevant range of output, a drastic allowance in the of the department's output, or closure of the group entirely, would reduce or remove these costs.

o Assets and liabilities are only controllable to the extent that the investment centers employer has authority to growth or reduce them.

Responsibility centers, administration control tools and requisite operation measurements.

(1) Cost centre.

Controllable costs, Can quantum through Variance prognosis and Efficiency measures.

(2) revenue centre.

Controllable Revenue, quantum by revenues.

(3) behalf centre.

Controllable costs, Sales prices (Including transfer prices), quantum through Profits.

(4) offering centre.

As a behalf centre except that expenditure is reported on a marginal cost basis, it can quantum through Contribution.

(5) investment centre.

Controllable costs, sales prices, output volumes, investment in fixed and current assets, it can quantum the Return on investment, Residual income, and other financial ratios.

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