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Chapter 5

Controllability of costs

If the principle of controllability is applied, a manager should be made
responsible and accountable only for the costs and revenues that he or
she is in a position to control.

A controllable cost is a cost ‘which can be influenced by its budget
holder’.

Controllable costs are variable costs or directly attributable fixed costs.

A distinction can be made between committed fixed costs and
discretionary fixed costs.

Illustrations and further practice

Now read the ‘controllable and uncontrollable costs’ illustration from Chapter 5,
and attempt example 2, ‘Controllability’.

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