Which variance is controllable by a manager?

Which variance is controllable by a manager?

• A. Material price change due to market conditions is non-controllable.
• B. Price variance from supplier negotiations is controllable.
• C. Labor rate variance is non-controllable.
• D. Volume variance is non-controllable.

Answer: (B)

The main idea is identifying which variances a manager can influence in the short term. A price variance from supplier negotiations is controllable because a manager can actively bargain, choose suppliers, and adjust terms to affect the actual price paid versus the standard. In contrast, a material price change due to market conditions comes from external market movements outside the manager’s immediate control. The labor rate variance is tied to prevailing wage rates or union agreements, which in many situations can’t be changed within the period. The volume variance reflects actual production versus planned output, which is driven by demand and capacity constraints and is not directly controlled in the short term. So, the only controllable variance among these is the price variance from supplier negotiations.

The main idea is identifying which variances a manager can influence in the short term. A price variance from supplier negotiations is controllable because a manager can actively bargain, choose suppliers, and adjust terms to affect the actual price paid versus the standard. In contrast, a material price change due to market conditions comes from external market movements outside the manager’s immediate control. The labor rate variance is tied to prevailing wage rates or union agreements, which in many situations can’t be changed within the period. The volume variance reflects actual production versus planned output, which is driven by demand and capacity constraints and is not directly controlled in the short term. So, the only controllable variance among these is the price variance from supplier negotiations.