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Give three possible reasons for a favorable variable overhead efficiency variance.

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By using Activity-Based-Costing, we can use a variety of cost drivers, which would improve the accuracy, since each overhead cost pool has its own activity (driver that drives the cost). For example, in a large and complex manufacturing corporation, it would be impossible to use a single activity or to be driven by a single factor, such as the number of units produced or the number of labor hours or machine hours.;Assume that variable manufacturing overhead is allocated using machine-hours. Give three possible reasons for a favorable variable overhead efficiency variance.

 

Paper#25661 | Written in 18-Jul-2015

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