Which formula correctly represents Controllable Profit (CP)?

Controllable Profit (CP) is designed to measure the profitability attributed to the aspects of a business that management can influence directly. The correct formula reflects this framework by including only those costs considered controllable.

The formula includes Net Sales minus several key costs: Cost of Goods Sold (COGS), Total Labors, Controllable expenses, and Advertising. Each of these elements is significant in understanding the profitability that is within the manager's control. COGS relates to the direct costs of the goods sold, Total Labors covers the expenses associated with employee wages, Controllable includes expenses that can effectively be managed by the team, and Advertising represents marketing expenditures which can also be adjusted or controlled strategically.

By using this specific formula, it captures a broader view of controllable expenses, thus giving a clearer picture of the profit that is directly affected by management decisions. This allows for more effective financial analysis and operational adjustments.

In contrast, other options fail to incorporate controllable expenses as comprehensively or incorrectly represent the relationships between sales and profit, limiting the understanding of management's impact on profitability.