Asked by Michael Williams on Jul 24, 2024
Verified
The variable overhead efficiency variance measures the difference between the actual level of activity and the standard activity allowed for the actual output, multiplied by the variable part of the predetermined overhead rate.
Variable Overhead Efficiency Variance
The difference between the actual level of activity (direct labor-hours, machine-hours, or some other base) and the standard activity allowed, multiplied by the variable part of the predetermined overhead rate.
Predetermined Overhead Rate
An estimated rate used to allocate manufacturing overhead costs to individual units of production, based on activity levels such as labor hours or machine hours.
Actual Level Of Activity
The real measure of how much work is performed or output is produced in a given period, often compared to planned or standard levels of activity.
- Grasp the variable and fixed overhead efficiency variance and their roles in cost management.
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Learning Objectives
- Grasp the variable and fixed overhead efficiency variance and their roles in cost management.
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