Controllable and uncontrollable costs cost

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Controllable costs “are costs that can affect the budget holder”

attempts to associate with responsibility for accounting expenses, revenues, assets and liabilities of Director most able to control them. As the accounting system, and therefore the difference in the control of uncontrolled costs.

o Most of the variable cost of a class is thought to be controlled in the short term because the manager can affect the efficiency with which resources are used, even if you know nothing about to rise or lower price levels.

o many fixed costs are uncontrollable (or tied) in the short term, although some costs may be fixed arbitrarily.

o many fixed costs directly to a department or profit center, although there are fixed (short term) the relevant range of output, a drastic reduction in the department’s output, or the closure of the class completely, reduce or remove these costs .

o of assets and liabilities can only be verified if the authority to increase or decrease Manager investment centers.

responsibility centers, administration tools and driver performance measurements.

(1) Cost Center.

controllable costs, to measure the variance and efficiency measures.

(2) Revenue Center.

regulated revenues, income measurement.

(3) Profit Center.

controllable costs and sales prices (including transfer pricing), measured in earnings.

(4) Contribute to center.

The profit center, except that the expenditures reported under marginal cost, the ability to measure the contribution.

(5) The investment center.

controllable costs, sales prices, production volumes, the fixed and current assets, the ability to measure return on investment, residual income, and other financial indicators.

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Source by Randika Lalith Abeysinghe

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