Briefly Explain Why a Favourable Variable Overhead Rate Variance May

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The Answer is The variable overhead rate variance is the difference between the actual variable overhead cost per unit of the cost-allocation base and the budgeted variable overhead cost per unit of the cost-allocation base, multiplied by the actual quantity of the variable overhead cost-allocation base used for the actual output.If a favourable variable overhead rate variance had been obtained by the managers of the company purchasing low-priced, poor-quality indirect materials, hired less talented supervisors, or performed less machine maintenance there could be negative future consequences.The long-run prospects for the business may suffer as the company ends up putting out a lower quality product, or it may end up having very large equipment repairs as a result of cutting corners in the short term.

Briefly Explain Why a Favourable Variable Overhead Rate Variance May

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Briefly Explain Why a Favourable Variable Overhead Rate Variance May

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Correct Answer:
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