ECONOMICS

Detailed explanation-1: -Thus, the controllable variance within the total factory overhead variance is that portion not related to changes in volume. Or, stated another way, the controllable variance is actual expenses minus the budgeted amount of expenses for the standard number of units allowed.

Detailed explanation-2: -The variable factory overhead controllable variance is the difference between the actual variable overhead costs and the budgeted variable overhead for actual production.

Detailed explanation-3: -It can be calculated using the following formula: Fixed Overhead Volume Variance = Applied Fixed Overheads – Budgeted Fixed Overhead. Here, Applied Fixed Overheads = Standard Fixed Overheads × Actual Production.

Detailed explanation-4: -We can calculate the Standard Variable Overhead for Actual Production using the following formula = Actual Output Units * Standard Rate per Unit.

Detailed explanation-5: -For example, excess usage of materials, excess time taken by worker etc. is the relevant examples of controllable variance. Uncontrollable variances are those variances which arise due to factors beyond the control of the management or concerned person or department of the organisation.