Distinguish between controllable and uncontrollable costs. Then, explain the following statement: 'The distinction between controllable and uncontrollable costs is used in evaluati... Distinguish between controllable and uncontrollable costs. Then, explain the following statement: 'The distinction between controllable and uncontrollable costs is used in evaluating the performance of a manager.'
Understand the Problem
The question is asking to differentiate between controllable and uncontrollable costs and to explain how this distinction relates to evaluating a manager's performance.
Answer
Controllable costs are those managers can influence; uncontrollable costs are beyond their control. Managers are evaluated based on controllable costs to ensure fairness.
Controllable costs are those that a manager can influence through their actions, such as labor or supplies. Uncontrollable costs are beyond a manager's influence, like rent or taxes. Evaluating managers based only on controllable costs ensures they are held accountable for decisions within their control, promoting fair performance assessments.
Answer for screen readers
Controllable costs are those that a manager can influence through their actions, such as labor or supplies. Uncontrollable costs are beyond a manager's influence, like rent or taxes. Evaluating managers based only on controllable costs ensures they are held accountable for decisions within their control, promoting fair performance assessments.
More Information
Performance evaluations focused on controllable costs ensure managers are judged on factors they can influence, promoting responsibility and decision-making improvements.
Tips
A common mistake is failing to consider the external factors affecting uncontrollable costs, which can lead to unfair evaluations of managerial performance.
Sources
- Controllable vs. Uncontrollable Costs - AccountingVerse - accountingverse.com
- Difference Between Controllable and Uncontrollable Costs - Finance Strategists - financestrategists.com
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