Question

Jacob is a department manager who recently instituted a new recognition program for his employees. He budgeted the cost of the new program at $10 per employee, but actual costs were $15 per employee.

The cost associated with the recognition program would be considered which of the following kinds of cost?

A. Fixed costB. Product costC. Controllable costD. Opportunity cost

Answer 1

Answer:

The correct option is C,controllable cost

Explanation:

A controllable cost a cost that the manager in whose department the cost is being incurred can influence the amount spendable on such cost.

Jacob in this case, can determine the worth of the recognition to be given to each employee as there is no cost that is too high or too little, hence the cost of the recognition program is a controllable cost.

It is not product cost as it is not related to any product, neither is it a fixed cost that the company must incurred.

Lastly it is also the cost of an alternative course of action forgone-opportunity cost