In Using the Total Cost Method of Applying the Cost-Plus

question 80

True/False

In using the total cost method of applying the cost-plus approach to product pricing, selling expenses, administrative expenses, and profit are covered in the markup.

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Definitions:

Variable Overhead

The portion of overhead costs that varies directly with production volume.

Variable Overhead Rate Variance

The variance between the expected variable overhead according to standard cost and the actual variable overhead costs incurred.

Variable Overhead Efficiency Variance

The difference between the actual variable overhead costs and the standard cost of variable overheads for the actual production units.

Direct Labor-Hours

The total time worked directly on the manufacturing of products.