Can the Variable Overhead Efficiency Variance

question 81

Essay

Can the variable overhead efficiency variance
a.be computed the same way as the efficiency variance for direct-cost items?
b.be interpreted the same way as the efficiency variance for direct-cost items? Explain.

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Definitions:

Investment Swings

Refers to the fluctuations in investment spending on business capital goods, which can be influenced by interest rates, business confidence, and economic conditions.

Rational Expectations Theory

This is based on three assumptions: (1) that individuals and business firms learn through experience to anticipate the consequences of changes in monetary and fiscal policy; (2) that they act immediately to protect their economic interests; and (3) that all resource and product markets are purely competitive.

Adaptive Expectations Theory

An economic theory that assumes individuals form their expectations about the future based on past experiences and gradually adjust as reality unfolds.

Accelerating Inflation Theory

A theory suggesting that inflation will speed up as demand grows and outpaces supply, leading to a continuous increase in price levels.