Question

The difference between the actual variable factory overhead costs and the budgeted variable overhead for actual production is termed variable factory overhead controllable variance. True False

Answer 1

False,

actual variable factory overhead costs= Actual Labour hrs * Actual variable overhead rate per hour

budgeted variable overhead for actual production=Actual Labour hrs * Std variable overhead rate per hour

Variance=Actual Labour hrs*( Actual variable overhead rate per hour-Std variable overhead rate per hour)

from above formula we can understand that variable overhead rate is changes so, variable over rate (fixed per unit) which is not in the control of entity so, it is not controllable variance