When Is a Cost Considered to Be Controllable

question 56

Multiple Choice

When is a cost considered to be controllable?

• A)only when the manager has the power to incur the cost within a given time period
• B)only if the cost is less than the budget amount
• C)only when it is a variable cost
• D)only when the amount changes based on different activity levels

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Definitions:

Equity Method

An accounting technique used to assess the profits earned by investments in other companies, where the investment's value is adjusted to reflect the investor’s share of the investee’s net assets.

Journal Entries

are records of financial transactions in the accounting system, ensuring that the debit and credit balances are equal.

Contractual Agreement

A legally binding contract that outlines the terms and conditions between two or more parties, specifying obligations, rights, and duties.

Proportionate Rights

The entitlements of shareholders to maintain their fractional ownership of a company by buying a proportionate number of new shares during issuance.