Question

Question: In each blank next to the following terms, place the identifying letter of its best description.

1. Indirect expenses	A. Costs are not within a manager’s control or influence.
2. Controllable cost	B. Costs that can be readily traced to a department.
3. Direct expenses	C. Costs that a manager has the ability to affect.
4. Uncontrollable cost	D. Costs incurred for the joint benefit of more than one department.

Short answer

1. Indirect expenses	D. Costs incurred for the joint benefit of more than one department.
2. Controllable cost	C. Costs that a manager has the ability to affect.
3. Direct expenses	B. Costs that can be readily traced to a department.
4. Uncontrollable cost	A. Costs are not within a manager’s control or influence.

Step-by-step solution

Definition of Departmental Rate

The rate charged by the department for each unit of goods produced through its operations is known as the departmental rate.All the production departments apply such a rate.

Indirect expenses

D. Costs incurred for the joint benefit of more than one department.

Reason: Indirect expenses are incurred for smooth operations of the different departments.

Controllable cost

C. Costs that a manager has the ability to affect.

Reason: The manager can influence some costs by increasing or decreasing the activity level. These costs are known as controllable costs.

Direct expenses

B. Costs that can be readily traced to a department.

Reason: The expenses directly associated with a department of the business entity are known as direct expenses.

Uncontrollable cost

A. Costs are not within a manager’s control or influence.

Reason: There are some costs that the manager cannot influence by changing the level of activity. These costs are known as uncontrollable costs.