The variable overhead spending variance, the fixed overhead spending variance, and the variable overhead efficiency variance can be combined to find the:
A) Quantity variance.
B) Controllable variance.
C) Volume variance.
D) Price variance.
E) Production variance.

Question

Quizplus · Accepted Answer

The variable overhead spending variance and fixed overhead spending variance collectively represent the overhead controllable variance, which is the difference between the actual overhead cost incurred and the budgeted overhead cost that is under the control of management. The variable overhead efficiency variance is a measure of the efficiency with which the production process used variable overhead resources. Therefore, combining these variances can help calculate the overhead controllable variance, which is often used to evaluate the performance of the production management team. The other options (quantity variance, volume variance, price variance, and production variance) are typically calculated for direct materials and/or direct labor and do not involve overhead cost variances.

The Variable Overhead Spending Variance, the Fixed Overhead Spending Variance