Why is the budget variance the real control variance, for fixed overhead?
A) It compares budgeted expenditures with budgeted fixed overhead costs.
B) It compares actual expenditures with budgeted fixed overhead costs.
C) It compares actual expenditures with budgeted variable overhead costs.
D) It compares the static budget with the flexible budget.

Question

Quizplus · Accepted Answer

The budget variance is the difference between actual fixed overhead costs and the budgeted fixed overhead costs. This variance is the real control variance because it shows the degree to which actual fixed overhead costs vary from what was originally planned in the budget. By comparing actual expenditures with budgeted fixed overhead costs, managers can identify areas where they have overspent or underspent and take corrective action to control costs in the future.

Why Is the Budget Variance the Real Control Variance, for Fixed