The controllable variance is the difference between the actual total overhead and:Multiple choice question.applied overhead based on a flexible budgetbudgeted overhead based on the master budgetapplied overhead based on the master budgetbudgeted overhead based on a flexible budget
Question
The controllable variance is the difference between the actual total overhead and:Multiple choice question.applied overhead based on a flexible budgetbudgeted overhead based on the master budgetapplied overhead based on the master budgetbudgeted overhead based on a flexible budget
Solution
The controllable variance is the difference between the actual total overhead and the budgeted overhead based on a flexible budget.
Here's why:
- The controllable variance is a measure of how much a manager was able to control costs in the short run.
- This variance is calculated by subtracting the budgeted amount of an expense (or group of expenses) from the actual amount that was incurred.
- A flexible budget adjusts or flexes for changes in the volumes of activity. It provides a much more realistic basis of comparison than a static (master) budget.
- Therefore, the controllable variance is the difference between the actual total overhead and the budgeted overhead based on a flexible budget.
Similar Questions
The overhead variance is the difference between:Multiple choice question.actual total overhead and the standard overhead budgetedactual total overhead and the standard overhead appliedbudgeted overhead and standard overhead applied
A company has budgeted total overhead of $10,575 at actual units produced and actual total overhead of $9,775. The controllable variance is:Multiple choice question.$800 U$800 F
The controllable variance is so called because it:Multiple choice question.refers to activities usually under management controlis used to control employeesrefers to activities not usually under management controlignores fixed overhead costs which are uncontrollable
The difference between actual overhead costs incurred and the budgeted (flexible) total overhead at actual units produced is the:Multiple ChoiceVolume variance.Price variance.Quantity variance.Production variance.Controllable variance.
A variable overhead budget variance is further analyzed into a variable overhead (price/rate/spending) variance and a variable overhead (usage/efficiency) variance.
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