Uncontrollable cost

An uncontrollable cost is an expense over which a person has no direct control. The concept most commonly applies to the manager of a department, whose departmental expenses include several line items which he has no ability to alter. Examples of uncontrollable costs are:

  • Rent expense
  • Corporate overhead allocation
  • Administrative overhead allocation
  • Depreciation expense

Uncontrollable costs can be a concern when a manager is being judged based on departmental expenses. For example, there is a scheduled increase in the rent payment to the landlord, and a portion of this expense is allocated to a department that occupies a portion of the rented property. The manager of that department appears to be managing his expenses poorly because of the rent expense increase, even though he was not responsible for the rent agreement.