Chapter 23, Problem 20E

To determine

Controllable Variance:

The overall variance which comprises of variable overhead spending and efficiency variance and the fixed overhead spending and volume variance is called the controllable variance. It is basically the combination of variable and fixed overhead which the management of a company can influence.

Volume Variance:

The variance which arises due to difference in the budgeted level of activity and the actual level is called volume variance. The sole reason for this kind of variance is the variation in the level of activity.

Computation of Variances and classification of favorable or unfavorable

1. Overhead volume variance

2. Overhead controllable variance