The standard cost of variable overhead is equal to the standard variable overhead application rate multiplied by the standard driver usage at the given level of production.

Question

Quizplus · Accepted Answer

The standard cost of variable overhead is indeed calculated by multiplying the standard variable overhead application rate (such as the rate per machine hour or labor hour) by the standard driver usage (the expected amount of the driver, such as machine hours or labor hours, needed) at the planned level of production.

The Standard Cost of Variable Overhead Is Equal to the Standard