The Actual Indirect-Cost Rate Is Calculated by Dividing Actual Total

question 155

True/False

The actual indirect-cost rate is calculated by dividing actual total indirect costs by the budgeted total quantity of the cost-allocation base.

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Definitions:

Variable Manufacturing Overhead

The portion of manufacturing overhead costs that varies directly with the volume of production, such as utilities for machinery.

Variable Overhead Efficiency Variance

The difference between the actual variable overhead incurred and the standard cost of variable overhead allocated for the actual production achieved.

Variable Overhead Rate Variances

The difference between the actual variable overhead incurred and the standard cost allocated, based on actual production activity.

Indirect Labor

Costs associated with employees who are not directly involved in the production of goods or services, such as maintenance and clerical staff.