Question

An example of an uncontrollable cost would include all of the following; except; ________.

a) Direct materials cost
b) Sales commissions
c) Property taxes
d) Variable manufacturing overhead

Answer 1

Direct materials cost is a variable cost that a company can control and adjust based on production levels, making it controllable, unlike fixed costs such as property taxes.

Step-by-step explanation:

An example of an uncontrollable cost does not include direct materials cost, as this is a variable cost that a company can control through production levels. As we define costs, we have fixed costs, which do not vary with the level of production, such as property taxes and potentially sales commissions if they are set at a flat rate. However, direct materials, much like variable manufacturing overhead, can be adjusted based on the amount of production. Therefore, a) Direct materials cost would be the correct answer since it's a variable cost that can be controlled by the company, unlike fixed costs such as property taxes or preset sales commissions.