One of the Primary Uses of a Cost of Production

question 16

True/False

One of the primary uses of a cost of production report is to assist management in controlling production costs.

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Definitions:

Variable Overhead Efficiency Variance

The difference between the actual variable overhead incurred and the standard cost of variable overhead allocated, based on the efficiency of operations.

Supplies Cost

Supplies cost refers to the expense incurred in purchasing office or production supplies that are necessary for day-to-day operations.

Variable Manufacturing Overhead

Costs in the manufacturing process that fluctuate with production volume, such as utilities and raw materials, which do not remain constant as production levels change.

Labor Efficiency Variance

The difference between the actual hours worked and the standard hours expected for the actual production achieved.