Briefly Explain the Meaning of the Variable Overhead Efficiency Variance

question 90

Essay

Briefly explain the meaning of the variable overhead efficiency variance and the variable overhead rate variance.

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Definitions:

Market Economy

An economic system where supply and demand from consumers and businesses dictate the production and pricing of goods and services.

Supply and Demand

Fundamental economic model based on the idea that the price and quantity of a good or service is determined by the availability (supply) and desire (demand) of that good or service.

Rationing Mechanism

A system used to allocate scarce goods and services using criteria other than price.

Surplus

An excess of supply over demand, resulting in an accumulation of unsold products or unused resources.