A Production Process May Yield a Tangible Product or a Service

question 98

True/False

A production process may yield a tangible product or a service and their unique characteristics determine the best approach for developing a cost management system.

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Definitions:

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the standard variable overhead expected for the actual production level.

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the standard cost of the variable overhead allotted for the actual production level.

Supplies

Materials and items that are used in the day-to-day operations of a business but are not directly tied to the production of goods or services.

Variable Overhead Efficiency Variance

The difference between the expected (standard) cost of variable overheads based on actual production and the actual cost incurred.