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Alternative to Total Overhead Variances
There is an easier approach to overhead variances. In this approach, the overheads are NOT sub-divided into their fixed and variable elements. Hence the specified variances are calculated as:
The variances indicated above are defined as follows:
1. Overhead Total Variance: that is the difference between the standard overhead cost specified for the production achieved and the actual cost incurred.
2. Overhead Expenditure Variance: such is the difference between the budgeted overheads and the actual overheads expenditure.
3. Overhead Efficiency Variance: such is the difference between the standard overhead rate for the actual hours taken and the standard overhead rate for the production achieved.
4. Overhead Volume Variance: such is the difference between the flexed budget allowance for the actual hours taken and the standard overhead cost of the actual hours taken.
Lapsol limited manufacture electrical appliances for the export market. The management of the company are considering investing in one of two possible capital expenditure projects.
sir i want to know the whole procress of costing
Material Price Variance (MPV) This may be described as the difference amoung the actual price and the standard price of the materials consumed. MPV = Actual quantity used (S
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what is irrelevant cost and give example
Alternative to Total Overhead Variances There is an easier approach to overhead variances. In this approach, the overheads are NOT sub-divided into their fixed and variable e
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Purpose of Cost Estimation In estimating it assists the future expenditure as cost prediction like the expenditure will depend upon the cost of the respective activities a)
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