[Solved] Variable overhead is overhead that increases as more production work is done. Total variable overhead expenditure therefore depends on the volume of production. Variable overhead is usually calculated as an amount for each direct labour hour worked.

Q.	Variable overhead is overhead that increases as more production work is done. Total variable overhead expenditure therefore depends on the volume of production. Variable overhead is usually calculated as an amount for each direct labour hour worked.
A.	The above statement is correct
B.	The above statement is incorrect
C.	none
D.	none
Answer» A. The above statement is correct

Do you find this helpful?

View all MCQs in

Cost and Works Accounting 2

Discussion

No comments yet

Related MCQs

Overheads can be absorbed into cost units by means of: • Physical unit produced • Percentage of prime cost • Percentage of direct wages • Direct labour hour rate • Machine hour rate
Which of the following procedure is incorrect for attributing overhead costs to cost units? I. Collecting production overhead costs by item II. Establishing cost centres III. Allocating and apportioning overhead costs to cost centres IV. Apportioning service cost centre costs to production cost centres V. Absorbing production cost centre costs into cost units
If the amount of production overheads absorbed into product costs is more than the actual production overhead expenditure, there is:
The absorption rate may be calculated by the fraction: • Total overhead costs • Total of absorption basis.
. Production Overheads are costs related to the production process other than direct labour and materials. They are also known as factory overheads since they are incurred inside the factory, other overheads such as selling and administrative overheads are always charged to in the period in which they are incurred
Overheads are usually added to cost units using a predetermined overhead absorption rate, which is calculated using figures from the budget.
The total overhead costs of each production centre should be:
Predetermined absorption rates is where, the absorption rate calculated in advance using estimates for cost and production volume in the annual financial plan or budget.
The apportionment of production overhead costs might be in two stages: • sharing (or dividing) general costs between production centres and service centres; and • then sharing the costs of the service centres between the production centres.
Under or over absorption is caused by the actual fixed overhead and production volume being different from those figures used to calculate the predetermined rate.