Question

True or false: The variable overhead rate variance uses the same basic formula as the labor rate variance except that the variable overhead rates are used instead of the direct labor rates.

Answer 1

Answer:

True

Step-by-step explanation:

The variable overhead rate variance refers to the difference in two variables.

The Variables are

1. The actual variable manufacturing overhead

2. The expected variable overhead given the number of hours worked

Labor rate variance is evaluated by

AH(AR - SR)

AH = actual hours

AR = actual rate

SR = standard rate.

The variable overhead rate variance is also calculated the same way except that it replaces the direct labor rates with variable overhead rates