The Fixed Overhead Cost Variance Measures the Difference Between Actual

question 94

True/False

The fixed overhead cost variance measures the difference between actual fixed overhead and budgeted fixed overhead to determine the controllable portion of total fixed overhead variance.

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Definitions:

Direct Labor-Hours

Direct labor-hours refer to the total hours worked by employees directly involved in the production process, used as a basis for allocating labor costs to products.

Machine-Hours

The total hours that machinery is operated during a specific period for production purposes.

Departmental Predetermined Overhead Rates

These rates are calculated to allocate manufacturing overhead costs to specific departments, based on estimated or actual overhead and activity levels.

Machine-Hours

A measure of production time using machinery; used as a basis for allocating manufacturing overhead costs to products.