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Traceable profit

Traceable profit deducts costs identifiable specifically with a division from the revenues attributable to it. It can include division-specific costs determined centrally, so it differs from profit controllable by the manager. This measure helps assess the division as an economic unit before arbitrary allocations of common central costs, subject to a clearly stated definition. Traceability alone does not establish whether a cost is avoidable on closure or relevant to another decision.

Worked example

A division has $100,000 controllable profit and a $15,000 centrally arranged lease solely for its premises. Traceable profit is $85,000. An allocated $12,000 group-chairman cost would reduce a fully allocated result to $73,000, but does not thereby become traceable or avoidable.

Common mistake

Assuming traceable costs are always controllable or would all disappear if a division closed.

Where it appears in your exams

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