The concept of responsibility accounting leads directly to the classification of cost as controllable. The controllability of a cost depends upon the levels of responsibility under consideration. A controllable cost may be defined as one which is reasonably subject to regulation by the executive with whose responsibility that cost is being identified. Thus, a cost which is uncontrollable at one level of responsibility may be regarded as controllable at some other, usually higher level.

Direct material and direct labor costs are usually controllable. As regards overheads, some costs are controllable and others are not. Indirect labor, supplies, and electricity are usually controllable. An allocated cost is not controllable.