Controllable Costs, as Used in a Responsibility Accounting System, Consist

question 23

Multiple Choice

Controllable costs, as used in a responsibility accounting system, consist of:

• A) only fixed costs.
• B) only direct materials and direct labor.
• C) those costs that a manager can influence in the time period under review.
• D) those costs about which a manager has some knowledge.
• E) those costs that are influenced by parties external to the organization.

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Definitions:

Wage Contract

An agreement between an employer and an employee that stipulates the terms of employment, including pay rate and job responsibilities.

Variable Costs Per Unit

Costs that vary with the level of production or sales volume, calculated on a per-unit basis.

Fixed Costs

Costs that do not vary with the volume of production or sales, such as rent, salaries, and insurance, remaining constant no matter the level of output.

Equipment Purchase

The act of acquiring capital equipment for business use, often involving a significant investment.