A cost which can be influenced by management decisions and actions is called which?

• A. Uncontrollable cost
• B. Controllable cost
• C. Incremental cost
• D. Opportunity cost

Answer: (B)

Controllable costs are those that a manager can influence through their decisions and actions within a given period. This includes expenses like materials usage, labor efficiency, and negotiated supplier terms—areas where a manager can directly affect the amount spent. Because a manager has authority over these costs, they are the ones evaluated for performance based on how well they control them. In contrast, costs that come from corporate decisions or external factors aren’t under a single manager’s control, so they’re considered uncontrollable. Incremental costs relate to the extra cost of a specific decision, while opportunity cost is the foregone benefit of not choosing the next best alternative, neither of which describe a cost that a manager can actively influence. Therefore, the cost that fits the description is controllable cost.