Which best defines controllable costs?

Controllable costs refer to expenses that management has the ability to influence or control. These costs can be directly affected by the decisions and actions taken by managers at different levels within an organization. For example, if a manager decides to reduce supply expenses by negotiating better rates or choosing alternative suppliers, that decision demonstrates their control over certain costs.

In contrast, expenses influenced by external factors or those that cannot be pinned down to specific departments don't fall into the category of controllable costs since the management does not have the authority or capacity to change those variables directly. Additionally, fixed costs, while they remain constant regardless of output in the short term, are often considered uncontrollable because they do not change based on the decisions made by management. Understanding controllable costs helps managers focus on areas where they can have the most impact, optimizing budgets and enhancing operational efficiency.