The-definition.com

Definition

Controllable cost

All costs and revenues are controllable at some level of responsibility within a company. This truth underscores the adage by the CEO of any organization that “the buck stops here” Under responsibility accounting, the critical issue is whether the cost or revenue is controllable at the level of responsibility with which it is associated. A cost over which a manager has control is called controllable cost.

From this definition it follows that:

  1. All costs are controllable by top management because of the broad range of its authority.
  2. Fewer costs are controllable as one moves down to each lower level of managerial responsibility because of the manager’s decreasing authority.
Share it:  Cite

More from this Section

  • Internal check
    Internal check is a method of organizing the accounts system of a business concern or ...
  • Target net income
    Target net income is the income objective set by the management. It indicates the sales ...
  • The Benefit of Budgeting
    The primary benefit of budgeting are: It requires all levels of management to a plan ...
  • CVP income statement
    CVP income statement is a statement for internal use that classifies costs as fixed or ...
  • Cumulative dividend
    Cumulative dividend is a feature of preferred stock entitling the stockholder to receive ...