Which factor must be considered when responsibilities are assigned to managers?

• A. Manager should be held responsible for all costs
• B. Only for those costs, revenues, profits, and assets over which they have substantial control
• C. Only for profits
• D. Only for assets

Answer: (B)

Responsibility accounting focuses on aligning accountability with the authority someone actually has. When responsibilities are assigned, you look at what the manager can truly influence. The best approach is to hold a manager responsible only for those costs, revenues, profits, and assets over which they have substantial control. This keeps performance fair and meaningful, because outcomes driven by factors outside the manager’s influence—like market demand or strategic decisions from higher levels—should not be blamed on them. For example, a production manager can affect controllable costs such as material usage and labor efficiency, as well as how assets are utilized, but they can’t directly control overall market prices or demand. Evaluating performance based on what is controllable gives an accurate picture of effectiveness and encourages the right actions.