Uncontrollable cost
Uncontrollable cost: a cost a manager cannot influence within the reporting period, such as an allocated head-office charge, excluded from that manager's performance appraisal.
See it move
A store manager's report shows €23,000 of total cost: €9,000 of local costs she genuinely manages, such as staffing and promotions, plus a €14,000 head-office allocation for marketing and IT that she has no say over. Because that allocation would appear whatever she decides, a fair performance review appraises her against the €9,000 controllable figure only, not the full €23,000.
Check yourself
A factory manager's monthly cost report shows €6,200 of local electricity and consumables he purchases and manages directly, plus a €4,500 share of group insurance premiums that are negotiated entirely by head office and allocated to his factory based on floor area. Under the controllability principle, what cost should the factory manager be appraised against?