Question

Provide an example that shows variable costing is divided among different activities, and that each activity has its own pre-determined variable overhead criterion. Explain your example in detail

Answer 1

vom Variable costing ! 2 Variable costs in direct proportion quantity are to expenses that the outpur Examples of common varcable costs raw materials, labour packaging , include labeling, Example het us assume company Orlam is into production of batt pens. books. The raw material required is papers, thread and ink for different colours of lines. Labours are employed along with machines to convert the papers into books. After the production of books they are to be packed and labeled C In this example the valcals i consists of raw materials, the direct expenses. costing constants labour and

to produce one. her the books the us further assume, raw material used cost $ 10. labour cost incurred per book is the labelling and packing cost per book cost will be $18. Overall total variable ($10+ $5+ $3). This example shows that varcab la costing is divided among different activities and that each activity has its own pre- determined variable overhead criterion.