ECONOMICS

Detailed explanation-1: -The answer is – it depends. The significance of a variance will depend on factors such as: Whether it is positive or negative – adverse variances (negative) should be of more concern.

Detailed explanation-2: -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.

Detailed explanation-3: -Management is responsible for evaluation of variances. This task is an important part of effective control of an organization. When total actual costs differ from total standard costs, management must perform a more penetrating analysis to determine the root cause of the variances.

Detailed explanation-4: -A controllable variance refers to the “rate” portion of a variance. A variance is comprised of two elements, which are the volume variance and the rate variance.