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

Definition and Explanation:

The controllable variance is the difference between actual expenses incurred and the budget allowance based on standard hours allowed for work performed. This variance may be favorable or unfavorable.

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Definition and Explanation:
Who is Responsible For Controllable Variance?
Relevant Articles:
What is the controllable overhead variance?
What does the controllable variance measure?
What is the difference between actual overhead and applied overhead?
What are the different overhead variance?

If the actual factory overhead is more than the budget allowance based on standard hours allowed for work performed, the variance is called unfavorable controllable variance.

If the actual factory overhead is less than the budget allowance based on standard hours allowed for work performed, the variance is called favorable controllable variance.

Overhead controllable variance is calculated when overall or net overhead variance is further analyzed using two variance method. Other variance that is calculated in two variance method is volume variance.

Formula:

Following formula is used for the calculation of this variance:

Controllable variance = Actual Factory Overhead - Budgeted Allowance Based on Standard Hours Allowed

Example:

From the following data calculate factory overhead controllable variance:

Actual overhead		$7,384
Actual hours used		3,475
Units produced during the period		850
Standard hours for one unit		4
Standard factory overhead rate:
Variable	$1.20
Fixed	$0.80	$2.00

Normal Capacity in labor hours		4000 hours

Solution:

Actual factory overhead		$7,384
Budgeted allowance based on standard hours allowed:
Fixed expenses budgeted	$3,200
Variable expenses (3,400* standard hours allowed � $1.20 variable overhead rate)	4,080	$7,280

Controllable variance		$104 unfav

*Standard hours allowed = Units produced during the period � Standard time allowed for on unit
3,400 = 850 units � 4 hours

This variance consists of variable expense only and can also be computed as follows:

Actual variable expense:
Actual overhead	$7,384
Fixed expenses budgeted (4000 � 0.80)	$3,200	$4,184

Variable expenses for standard hours allowed (3,400*� $1.20)		4,080

Controllable variance		$104 unfav

Who is Responsible For Controllable Variance?

The controllable variance is the responsibility of the department managers to the extent that they can exercise control over the costs to which the variances relate.

Relevant Articles:

�	Definition and Explanation of Standard Cost
�	Purposes and Advantages of Standard Costing System
�	Setting Standards
�	Materials Price Standard
�	Materials Price Variance
�	Materials Quantity Standard
�	Materials Quantity Variance
�	Direct Labor Rate Standard
�	Direct Labor Rate Variance
�	Direct Labor Efficiency Standard
�	Direct Labor Efficiency Variance
�	Factory Overhead Cost Standards
�	Overall or Net Factory Overhead Variance
�	Overhead Controllable Variance
�	Overhead Volume Variance
�	Overhead Spending Variance
�	Overhead Idle Capacity Variance
�	Overhead Efficiency Variance
�	Variable Overhead Efficiency Variance
�	Fixed Overhead Efficiency Variance
�	Mix and Yield Variance
�	Variance Analysis Example
�	Standard Costing and Variance Analysis Formulas
�	Management by Exception and Variance Analysis
�	International Uses of Standard Costing System
�	Advantages, Disadvantages, and Limitations of Standard Costing

What is the controllable overhead variance?

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

What does the controllable variance measure?

The controllable variance means the variances that influence the business which consists of both fixed and factory overhead variances. In the controllable variance, the business estimates the overhead variances between the actual and estimated.

What is the difference between actual overhead and applied overhead?

In short, the main difference between the two concepts is that actual overhead is the amount of cost actually incurred, while applied overhead is the standard amount of overhead applied to cost objects. Given this difference, the two figures are rarely the same in any given year.

What are the different overhead variance?

Total overhead cost variance can be subdivided into budget or spending variance and efficiency variance. Budget or spending variance is the difference between the budget and the actual cost for the actual hours of operation.