The Following Standards for Variable Overhead Have Been Established for a Company

question 148

Essay

The following standards for variable overhead have been established for a company that makes only one product:
The following data pertain to operations for the last month:
Required:
a. What is the variable overhead rate variance for the month?
b. What is the variable overhead efficiency variance for the month?

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Definitions:

Depreciation Expense

The allocated amount of an asset's cost charged to expense over time, reflecting the loss in value as the asset is used in operations.

Straight-Line Depreciation Rate

A method of calculating depreciation of an asset, distributing its cost evenly across its useful life.

Useful Life

The estimated period over which a fixed asset is expected to be usable by the company, affecting its depreciation calculation.

Depreciation Percentage

The rate at which a company depreciates an asset, expressed as a percentage of its total value.