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variable overhead efficiency variance |
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Definition of variable overhead efficiency variancevariable overhead efficiency variancethe difference between budgeted variable overhead based on actual input activity and variable overhead applied to production
Related Terms:overhead efficiency variancethe difference between total budgeted overhead at actual hours and total budgeted applied overheadthe amount of overhead that has been assigned to Work in Process Inventory as a result of productive activity; credits for this amount are to an overhead account budget variancethe difference between total actual overhead Capital market efficiencyReflects the relative amount of wealth wasted in making transactions. An efficient Continuous random variableA random value that can take any fractional value within specified ranges, as controllable variancethe budget variance of the two variance approach to analyzing overhead variances CovarianceA statistical measure of the degree to which random variables move together. CovarianceA measure of the degree to which returns on two assets move in decision variablean unknown item for which a linear programming dependent variablean unknown variable that is to be predicted Direct materials mix varianceThe variance between the budgeted and actual mixes of Discrete random variableA random variable that can take only a certain specified set of discrete possible EfficiencyReflects the amount of wasted energy. efficiencya measure of the degree to which tasks were performed EfficiencyThe ability to produce the things most wanted at the least cost. Efficiency WageWage that maximizes profits. Endogenous variableA value determined within the context of a model. Exogenous variableA variable whose value is determined outside the model in which it is used. Also called External efficiencyRelated: pricing efficiency. Factory overheadAll the costs incurred during the manufacturing process, minus the Fixed overheadThat portion of total overhead costs which remains constant in size fixed overhead spending variancethe difference between the total actual fixed overhead and budgeted fixed overhead; fixed overhead volume variancesee volume variance independent variablea variable that, when changed, will Informational efficiencyThe speed and accuracy with which prices reflect new information. key variablea critical factor that management believes will labor efficiency variancethe number of hours actually worked minus the standard hours allowed for the production Labor efficiency varianceThe difference between the amount of time that was budgeted labor mix variance(actual mix X actual hours X standard rate) - (standard mix X actual hours X standard rate); labor rate variancethe actual rate (or actual weighted average rate) paid to labor for the period minus the standard rate multiplied by all hours actually worked during the period; Labor rate varianceThe difference between the actual and standard direct labor rates labor yield variance(standard mix X actual hours X standard rate) - (standard mix X standard hours X standard rate); manufacturing cycle efficiency (MCE)a ratio resulting from dividing the actual production time by total lead time; Market EfficiencySee efficiency. Marketplace price efficiencyThe degree to which the prices of assets reflect the available marketplace material mix variance(actual mix X actual quantity X standard price) - (standard mix X actual quantity X standardprice); material price variancetotal actual cost of material purchased material quantity variance(actual quantity X standard price) - (standard quantity allowed standard price); material yield variance(standard mix X actual quantity X standard price) - (standard mix X standard quantity X standard price); Materials price varianceThe difference between the actual and budgeted cost to Materials quantity varianceThe difference between the actual and budgeted quantities Mean-variance analysisEvaluation of risky prospects based on the expected value and variance of possible outcomes. Mean-variance criterionThe selection of portfolios based on the means and variances of their returns. The Mean-variance efficient portfolioRelated: Markowitz efficient portfolio Minimum-variance frontierGraph of the lowest possible portfolio variance that is attainable for a given Minimum-variance portfolioThe portfolio of risky assets with lowest variance. Non-production overheadA general term referring to period costs, such as selling, administration and financial expenses. noncontrollable variancethe fixed overhead volume variance; Normal random variableA random variable that has a normal probability distribution. overapplied overheada credit balance in the overhead account OverheadAny cost other than a direct cost – may refer to an indirect production cost and/or to a non-production expense. overheadany factory or production cost that is indirect to Overhead allocationThe process of spreading production overhead equitably over the volume of production of goods or services. overhead application ratesee predetermined overhead rate overhead costsoverhead generally refers to indirect, in contrast to direct, Overhead rateThe rate (often expressed per hour) applied to the time taken to produce a product/service, used to allocate production overheads to particular products/services based on the time taken. May be calculated on a business-wide or cost centre basis. overhead spending variancethe difference between total actual overhead and total budgeted overhead at actual Portfolio varianceWeighted sum of the covariance and variances of the assets in a portfolio. predetermined overhead ratean estimated constant charge per unit of activity used to assign overhead cost to production or services of the period; it is calculated by dividing total budgeted annual overhead at a selected level of volume or activity by that selected measure of volume or activity; it is also the standard overhead application rate Pricing efficiencyAlso called external efficiency, a market characteristic where prices at all times fully Production overheadA general term referring to indirect costs. Production yield varianceThe difference between the actual and budgeted proportions Random variableA function that assigns a real number to each and every possible outcome of a random experiment. Selling price varianceThe difference between the actual and budgeted selling price for Semi-strong form efficiencyA form of pricing efficiency where the price of the security fully reflects all semi-strong-form efficiencyMarket prices reflect all publicly available information. Semi-variable costsCosts that have both fixed and variable components. Serial covarianceThe covariance between a variable and the lagged value of the variable; the same as slack variablea variable used in a linear programming problem standard overhead application ratea predetermined overhead rate used in a standard cost system; it can be a separate variable or fixed rate or a combined overhead rate Strong-form efficiencyPricing efficiency, where the price of a, security reflects all information, whether or strong-form efficiencyMarket prices rapidly reflect all information that could in principle be used to determine true value. surplus variablea variable used in a linear programming problem that represents overachievement of a minimum requirement; it is associated with greater-than-or-equal-to constraints total overhead variancethe difference between total actual overhead and total applied overhead; it is the amount of underapplied or overapplied overhead total variancethe difference between total actual cost incurred underapplied overheada debit balance in the overhead account at the end of a period; when the applied overhead amount is less than the actual overhead that was incurred VariableA value determined within the context of a model. Also called endogenous variable. Variable annuitiesAnnuity contracts in which the issuer pays a periodic amount linked to the investment Variable AnnuityA form of annuity policy under which the amount of each benefit is not guaranteed or specified. The amounts fluctuate according to the earnings of a separate investment account. Variable costA cost that is directly proportional to the volume of output produced. When production is zero, Variable costA cost that increases or decreases in proportion with increases or decreases in the volume of production of goods or services. variable costa cost that varies in total in direct proportion Variable costA cost that changes in amount in relation to changes in a related activity. variable cost ratiothe proportion of each revenue dollar Variable costingA method of costing in which only variable production costs are treated as product costs and in which all fixed (production and non-production) costs are treated as period costs. variable costinga cost accumulation and reporting method variable costsCosts that change as the level of output changes. VARIABLE EXPENSESThose that vary with the amount of goods you produce or sell. These may include utility bills, labor, etc. variable expensesExpenses that change with changes in either sales volume Variable life insurance policyA whole life insurance policy that provides a death benefit dependent on the variable overhead spending variancethe difference between total actual variable overhead and the budgeted amount of variable overhead based on actual input activity Variable price securityA security, such as stocks or bonds, that sells at a fluctuating, market-determined price. Variable rate CDsShort-term certificate of deposits that pay interest periodically on roll dates. On each roll Variable rate loanLoan made at an interest rate that fluctuates based on a base interest rate such as the Variable rated demand bond (VRDB)Floating rate bond that can be sold back periodically to the issuer. VarianceA measure of dispersion of a set of data points around their mean value. The mathematical VarianceThe weighted average of the squared deviations from the variancea difference between an actual and a standard or VarianceThe dispersion of a variable. The square of the standard deviation.
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