Controllable and uncontrollable costs
Posted: Thu Jan 23, 2025 4:53 am
Controllable costs are costs that a business can control.
What is included. Costs for raw materials and supplies, employee salaries, taxes. The company can optimize these costs, for example, by finding suppliers who offer better prices or by implementing resource-saving technologies in production.
Why take into account. Taking into account controlled costs will allow for more efficient use of the company's resources. For example, redistribute expenses to departments depending on their contribution to business results.
Example. The company director conducted an audit of contractors, and it turned out that there were no contractors who needed input value-added tax - VAT. Then he transferred the company to a simplified philippines telegram data taxation system. The business received an exemption from VAT, property and profit taxes and reduced costs.
Uncontrolled , or non-operating, costs are expenses that cannot be influenced.
What is included. Loan arrears, rent fixed in a contract for a certain period, insurance premiums, etc.
Why take it into account. Uncontrolled costs are used to evaluate the performance of employees or departments that bear financial risks. This practice is usually used in large companies.
Example. The owner of a beauty salon chooses and negotiates the terms of supply with companies that sell equipment and materials for beauty salons. If the supplier leaves the market and it is not possible to quickly find a replacement, this is not the fault of the business owner: he cannot influence the supplier's decision to stay on the market.
What is included. Costs for raw materials and supplies, employee salaries, taxes. The company can optimize these costs, for example, by finding suppliers who offer better prices or by implementing resource-saving technologies in production.
Why take into account. Taking into account controlled costs will allow for more efficient use of the company's resources. For example, redistribute expenses to departments depending on their contribution to business results.
Example. The company director conducted an audit of contractors, and it turned out that there were no contractors who needed input value-added tax - VAT. Then he transferred the company to a simplified philippines telegram data taxation system. The business received an exemption from VAT, property and profit taxes and reduced costs.
Uncontrolled , or non-operating, costs are expenses that cannot be influenced.
What is included. Loan arrears, rent fixed in a contract for a certain period, insurance premiums, etc.
Why take it into account. Uncontrolled costs are used to evaluate the performance of employees or departments that bear financial risks. This practice is usually used in large companies.
Example. The owner of a beauty salon chooses and negotiates the terms of supply with companies that sell equipment and materials for beauty salons. If the supplier leaves the market and it is not possible to quickly find a replacement, this is not the fault of the business owner: he cannot influence the supplier's decision to stay on the market.