Which term describes a cost that cannot be affected by management within a given time span?

Which term describes a cost that cannot be affected by management within a given time span?

• A. Controllable cost
• B. Responsibility accounting
• C. Uncontrollable cost
• D. Incremental cost

Answer: (C)

Costs that cannot be influenced by management in a given time period are called uncontrollable costs. This happens when the amount is fixed by contracts, long-term commitments, or external factors outside the manager’s authority for that period. For example, depreciation, lease payments, or fixed taxes are typically uncontrollable within a short budget cycle because they’re set by past decisions or external arrangements. In contrast, costs that a manager can influence through decisions made during the period—such as materials usage, overtime, or choosing suppliers within negotiated terms—are controllable costs. Incremental cost refers to the additional cost of a specific decision or action, not to whether the cost can be controlled in the period. Responsibility accounting is the system used to evaluate performance by responsibility centers, not a type of cost.

Costs that cannot be influenced by management in a given time period are called uncontrollable costs. This happens when the amount is fixed by contracts, long-term commitments, or external factors outside the manager’s authority for that period. For example, depreciation, lease payments, or fixed taxes are typically uncontrollable within a short budget cycle because they’re set by past decisions or external arrangements. In contrast, costs that a manager can influence through decisions made during the period—such as materials usage, overtime, or choosing suppliers within negotiated terms—are controllable costs. Incremental cost refers to the additional cost of a specific decision or action, not to whether the cost can be controlled in the period. Responsibility accounting is the system used to evaluate performance by responsibility centers, not a type of cost.