The controllable variance is the difference between the actual total overhead and:

The controllable variance is the difference between the actual total overhead and:

• A. Budgeted overhead based on a flexible budget
• B. Budgeted overhead based on a static budget
• C. Actual overhead
• D. Standard overhead applied

Answer: (B)

Controllable variance reflects what management can influence in the period by controlling costs, holding the activity level fixed at the original plan. It compares actual total overhead to the budgeted overhead from the static budget (the original plan, not adjusted for actual activity). Differences due to producing more or fewer units—the volume changes—are not part of this variance; they show up as volume variance instead. So, the controllable variance is the difference between actual overhead and budgeted overhead based on a static budget. If actual costs exceed the static-budget costs, the variance is unfavorable; if lower, it’s favorable.

Controllable variance reflects what management can influence in the period by controlling costs, holding the activity level fixed at the original plan. It compares actual total overhead to the budgeted overhead from the static budget (the original plan, not adjusted for actual activity). Differences due to producing more or fewer units—the volume changes—are not part of this variance; they show up as volume variance instead. So, the controllable variance is the difference between actual overhead and budgeted overhead based on a static budget. If actual costs exceed the static-budget costs, the variance is unfavorable; if lower, it’s favorable.