All 38 Variance Analysis questions
More in Variance Analysis
What are the possible causes of an adverse labor efficiency variance? What are ideal, attainable, and basic standards? What is the sales mix variance? What is the sales quantity variance? How does the timing of the materials price variance calculation matter? How do you decide the significance of a variance statistically? What causes a favorable labour rate variance and an adverse one? How is the fixed overhead variance analyzed under absorption costing? What is the difference between the sales volume variance valued at contribution versus profit? What is the materials mix and yield variance?
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Budgeting & Forecasting › Variance Analysis

What is the significance of controllable versus uncontrollable variances?

Intermediate

Answer

Controllable variances arise from factors a manager can influence (efficiency, local buying) and are the fair basis for performance evaluation. Uncontrollable variances stem from external factors (market prices, weather, group policy) beyond the manager's control. Separating them (e.g., planning vs operational) ensures fair accountability.
Real-world example A price rise imposed by the market is uncontrollable, while excess usage is controllable by the manager.

Common follow-ups: Why separate the two? | Which is used to judge managers?

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All 38 Variance Analysis questions