BUSINESS ADMINISTRATION
ACCOUNTING FOR MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Controllable
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Non controllable
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We need further information to arrive at a decision as whether a cost is controllable or non controllable depends on the level of management authority .
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Detailed explanation-1: -Indirect costs, on the other hand, are expenses unrelated to producing a good or service. An indirect cost cannot be easily traced to a product, department, activity, or project.
Detailed explanation-2: -Controllable costs are those costs that can be altered in the short term. More specifically, a cost is considered to be controllable if the decision to incur it resides with one person. If the decision instead involves a number of individuals, then a cost is not controllable from the perspective of any one individual.
Detailed explanation-3: -Cost behavior analysis refers to management’s attempt to understand how operating costs change in relation to a change in an organization’s level of activity. These costs may include direct materials, direct labor, and overhead costs that are incurred from developing a product.
Detailed explanation-4: -It may establish the practice and procedure of making cost records. The need for installing a costing system should be justified by a cost-benefit analysis. The benefits expected from the costing system should more than compensate the expenses of installing and operating the system.