The Formula for Computing the Overhead Volume Variance Is

question 151

Multiple Choice

The formula for computing the overhead volume variance is

• A) fixed overhead rate times (actual hours less standard hours allowed).
• B) variable overhead rate times (actual hours less standard hours allowed).
• C) fixed overhead rate times (normal capacity hours less standard hours allowed).
• D) variable overhead rate times (normal capacity hours less standard hours allowed).

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Definitions:

Ending Inventory

Ending Inventory is the total value of all inventory, including raw materials, work-in-process, and finished goods, that a company has at the end of an accounting period.

Perpetual Inventory System

A continuously updated system for tracking inventory that adjusts in real-time with each sale or return transaction, maintaining constant, accurate inventory records.

Last-In, First-Out

An inventory valuation method that assumes the most recently produced items are sold first, with costs of the latest inventory purchases used first in determining profitability.

Cost of Goods Sold

The direct costs tied to the production of goods sold by a company, including both materials and labor costs.