If the controllable overhead variance is favorable, the overhead volume variance
A)will be favorable.
B)may be favorable or unfavorable.
C)will not be significant and may be omitted from the analysis.
D)will be zero.

Question

Quizplus · Accepted Answer

The controllable overhead variance refers to the variance that is controllable by the management, such as reducing costs through cost-cutting measures. The overhead volume variance refers to the variance caused by changes in the level of activity. Therefore, if the controllable overhead variance is favorable, it does not necessarily mean that the volume variance will also be favorable. It could be favorable or unfavorable depending on the level of activity. Thus, option B is the best choice.

If the Controllable Overhead Variance Is Favorable, the Overhead Volume