cost

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.

Thanks for brilliant explanation :)

You are welcome :-)

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 litres Normal 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 places

In 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.