Controllable cost
Controllable cost is one that a specific manager has the authority to increase or reduce within a given period — the only category on which that manager should be evaluated under responsibility accounting.
Also known ascontrollable costs
See it move
A Venn diagram shows two overlapping circles — one for the manager's authority and one for the department's total costs — with the intersection labelled 'Controllable costs.' Only expenses that fall within both circles belong on a manager's performance scorecard. Head-office allocations and depreciation on centrally approved assets lie outside the manager's circle and must be excluded from her evaluation.
Check yourself
A regional sales manager has authority over her team's travel and entertainment spend and can approve or reject overtime requests. Head office allocates a share of corporate IT infrastructure costs and a building lease charge to her region. Which of the following is a controllable cost for her?