What Are the "Three Cs" That Underwriters Use to Evaluate

question 22

Essay

What are the "three Cs" that underwriters use to evaluate loan applications? Briefly define them.

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Definitions:

Labor Rate Variance

The difference between the actual cost of labor and the budgeted or standard cost of labor.

Direct Materials Purchases Variance

Direct materials purchases variance analyzes the difference between the actual cost of materials purchased and the budgeted cost, impacting budgeting and cost control.

Variable Overhead

Those overhead costs that vary in total directly and proportionately with changes in production or activity level.

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the expected variable overhead based on a standard rate.