Vulcan Tool and Die Company has developed a cost pool for a machine center that bores holes into cast iron material. The costs in the pool include depreciation on the boring machine, electricity needed to run the machine, depreciation on the factory space required by the machine center, and the wages of the machine operator. Of these costs, which would be classified as manageable?
A) Only the operator's wages.
B) The operator's wages and the electricity consumed by machine operations.
C) Depreciation on the machine, but not on the factory space.
D) All of these costs are manageable due to the homogeneity of the resources in the pool.

Question

Quizplus · Accepted Answer

Manageable costs are those that can be influenced or changed by management decisions in the short term. Operator wages and electricity consumption can be directly managed through operational efficiencies, scheduling, and conservation efforts. Depreciation on the machine and factory space is generally fixed and determined by accounting practices over the asset's useful life, making them less directly manageable in the short term.

Vulcan Tool and Die Company Has Developed a Cost Pool