True or false: The variable overhead rate variance uses the same basic formula as the labor rate variance except that the variable overhead rates are used instead of the direct labor rates.

Question

Mathematics

Piper Schmidt

10 October, 03:14

True or false: The variable overhead rate variance uses the same basic formula as the labor rate variance except that the variable overhead rates are used instead of the direct labor rates.

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Answers (1)

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Kira Macdonald · Answer 1

True

Step-by-step explanation:

The variable overhead rate variance refers to the difference in two variables.

The Variables are

1. The actual variable manufacturing overhead

2. The expected variable overhead given the number of hours worked

Labor rate variance is evaluated by

AH (AR - SR)

AH = actual hours

AR = actual rate

SR = standard rate.

The variable overhead rate variance is also calculated the same way except that it replaces the direct labor rates with variable overhead rates