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While studying about standard costing students need to learn the steps of developing budgeted variable overhead rates. It involves some calculations. These calculations are very simple if there is someone to guide you properly. Myhomeworkhelp.com is the right destination for those who are looking for reliable developing budgeted variable overhead rates homework help.
Before explaining this topic our developing budgeted variable overhead rates homework help providers explain variable overhead rates.
What are variable overhead rates?
Variable overhead rates include those production costs which differ roughly in context to changes in production output. Any business organization fixes its future expenditure levels on the basis of variable overhead rates. It also helps businesses to evaluate the lowest possible price at which they can sell their finished goods.
Given below some examples of variable overhead:
- Production supplies
- Materials handling wages
- Equipment utilities
Steps for developing budgeted variable overhead costallocation rates
There are four steps in developing budgeted variable overhead cost-allocation rates. While studying this topic, students must keep in mind that budgeted rate is same as the standard rate.
Step 1: Select the period for which you want to plan a budget
Usually, companies use a 12-month budget period for smooth seasonal effects.
Step 2: Selection of cost-allocation bases for allocation
For example, jacket manufacturing company Color Plus select machine-hours as a cost-allocation base. According to them machine-hours is the sole cost driver of variable overhead
Step 3: Identification of variable overhead costs associated with allocation of cost base
In this step, companies usually group its entire variable overhead costs which include costs of energy, engineering support, machine maintenance, indirect materials, and indirect manufacturing labor in a single cost pool.
Those who come to us for developing budgeted variable overhead rates assignment help also want to know about fixed overhead. Our account experts listen to their queries very carefully and answer all of their questions. Fixed overhead costs do not fluctuate frequently. It includes rent, salary, insurance payment, depreciation, etc. Unlike variable overhead, fixed overhead does not vary with production volume.
Analyzing the various steps:
Sometimes, our developing budgeted variable overhead rates assignment help providers have to solve questions on analysis of variable overhead with two variances:
(i) Variable overhead efficiency variance (ii) Variable overhead spending variance
The first one is the difference between in the actual and budgeted operational hours. A company applies variable overhead efficiency variance to the standard overhead rate for each hour.
The second variance is the difference between the actual expenditure and the standard rate of expenditure on variable overhead.
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