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Hi Mr. John
Can you explain the differences between controllable and non-controllable cost with examples?
second question
Why do apportioned head office costs not included in the manager’s control areas in the profit centre?Controllable costs are those that the manager of the division controls. So, for example, if the manager is allowed to fix the wages of his/her employees then this is a controllable costs.
Non-controllable costs are those that the manager of the division has no control over. So, if head office charges the division with a share of the head office costs, the manager has no control over the amount – it is head office who decides what the costs are, not the manager. Another example (for a profit centre) is depreciation. In a profit centre the manager cannot decide on the purchase of non-current assets – it is head office who decides. Therefore the manager has no control over the purchase and therefore no control over the amount of depreciation.
Hi John,
Could you help me with the question below.
A paint company has recorded the following information for the process last month:
Raw material(350 litres) $4250
Labour and overhead $2495
Actual output 325 litresNormal output expected to be 95 litres for every 100 litres of raw material.
What is the average cost per unit of completed output, to 2 decimal placesIn future please start a new thread when it is a different topic!
You must have an answer in the same book in which you found the question, so please say which part of the answer is causing you a problem.
(This forum is to help with problems if you do not understand something in one of our free lectures, or if you do understand part of an answer to a question. We do not simply provide answers to test questions)Our free lectures on process costing cover everything you need to be able to answer this question.
Our free lectures are a complete course for Paper F2 and cover everything needed to be able to pass the exam well.
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