Only Value-Adding Activities Are Included in the Cost Hierarchy

question 149

True/False

Only value-adding activities are included in the cost hierarchy.

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Definitions:

Actual Total Variable Overhead Cost

The actual incurred costs that vary with production volume, such as raw materials and direct labor.

Labour Efficiency Variance

The difference between the actual labor hours worked and the standard labor hours set for the level of production achieved.

Standard Labour Hours

The estimated hours required to produce a unit of product, used in planning and efficiency analysis.

Actual Total Labour Cost

The real expense incurred for labor during the production process, covering all employees directly involved in manufacturing.