Question

The overhead controllable variance is the difference between

a. the actual overhead and the overhead applied to production.
b. actual overhead and budgeted overhead based on standard hours allowed.
c. budgeted overhead based on standard hours allowed and budgeted overhead based on actual hours worked.
d. budgeted overhead based on standard hours allowed and the overhead applied to production.

Answer 1

Answer: Between actual overhead and budgeted overhead based on standard hours allowed---- B

ExplanatioN: The controllable variance is defined as the difference between actual expenses or overhead incurred and the budget overhead allowance based on standard hours allowed for work done. The variance is unfavorable controllable variance If the actual overhead is greater than the budgeted overhead based on standard hours allowed for work done and is termed favorable controllable variance if the opposite occurs ie actual overhead being less than budgeted overhead based on standard hours allowed for work to be done.