Multiple Choice
A builder's risk form is most often written as which of the following types of insurance policies?
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1. Introduction to Accounting
Types of Accounting
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A(n) _____ cost is not within the manager's control or influence.
A
Uncontrollable
B
Variable
C
Direct
D
Incremental
Verified step by step guidance1
Understand the concept of controllable and uncontrollable costs: Controllable costs are those that a manager can influence or change within a specific time frame, such as labor hours or material usage. Uncontrollable costs, on the other hand, are costs that the manager cannot directly influence, such as fixed costs or costs determined by external factors.
Analyze the options provided: Variable costs are typically controllable because they change with the level of activity. Direct costs are also controllable as they are directly tied to a specific product or department. Incremental costs refer to additional costs incurred when making a decision, which can be controllable depending on the context.
Focus on the term 'uncontrollable': This refers to costs that are outside the manager's sphere of influence, such as rent, depreciation, or regulatory fees.
Match the definition of 'uncontrollable cost' with the correct option: Based on the explanation above, identify which option aligns with the concept of a cost that the manager cannot control.
Conclude that the correct answer is 'Uncontrollable,' as it directly matches the definition provided in the problem statement.
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