Multiple Choice
Managers who redo budgets, rethink processes, or revise policies are typically engaged in which type of accounting?
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1. Introduction to Accounting
Types of Accounting
Multiple Choice
A cost that a manager can determine or influence is called a(n):
A
Fixed cost
B
Controllable cost
C
Sunk cost
D
Indirect cost
Verified step by step guidance1
Understand the definitions of the terms provided in the options: Fixed cost, Controllable cost, Sunk cost, and Indirect cost.
A Fixed cost is a cost that does not change with the level of production or sales, such as rent or salaries. It is not directly influenced by a manager's decisions in the short term.
A Controllable cost is a cost that a manager has the authority to influence or change, such as labor hours or material usage within their department.
A Sunk cost is a cost that has already been incurred and cannot be recovered, such as past investments in equipment. These costs are not influenced by current decisions.
An Indirect cost is a cost that cannot be directly traced to a specific product or department, such as utilities or administrative expenses. These are not typically controllable by a single manager. Based on these definitions, the correct term for a cost that a manager can determine or influence is a Controllable cost.
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