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Controllable profit

Controllable profit is profit calculated using the revenues and costs that the specified manager can influence over the assessment period. It supports evaluation of managerial performance rather than the entire division’s economic performance. The boundary depends on delegated authority, timing and central decisions; traceable costs are not automatically controllable by the current manager. State the included items and use consistent treatment of assets when calculating a controllable return on investment or residual income.

Worked example

A division earns $180,000 contribution and incurs $50,000 fixed cost controlled by its manager. Its controllable profit is $130,000. A further $20,000 division-specific lease imposed by head office may reduce traceable divisional profit to $110,000 while remaining outside this manager’s controllable measure.

Common mistake

Treating every cost identifiable with the division as controllable by its manager.

Where it appears in your exams

QualificationExamRelationshipPeriod
ACCA APM Direct September 2026–June 2027
ACCA PM Direct September 2026–June 2027