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Please see the paragraph “Reducing Overhead Costs” below to help answer the following questions 1 & 2. Question 3 is related to “variances”. 1) Going paperless can save companies a lot of money. It also is better for the environment and saves trees, which also helps the company’s image. Should there be any security concerns for people going paperless with important documents now though, or are consumers relatively safe? 2) Using technology is a key way to help reduce overhead costs. Is that necessary for a business to survive in today’s world, or are there still businesses out there that don’t incorporate modern technology in managing their operations? 3) Incorrect interpretation of favorable variances cause’s problems for a business for example a business might attempt to create a favorable material price variance by using cheaper material. This although would create favorable material variance but might lead to a sub-standard product and loss of customers. What would be an example of a favorable variance leading to a substandard product? Variances Budget variance The difference between the actual fixed overhead costs and the budgeted fixed overhead costs for the period. Denominator activity The level of activity used to compute the predetermined overhead rate. Volume variance The variance that arises whenever the standard hours allowed for the actual output of a period are different from the denominator activity level that was used to compute the predetermined overhead rate. It is computed by multiplying the fixed component of the predetermined overhead rate by the difference between the denominator hours and the standard hours allowed for the actual “Reducing Overhead Costs” The article I read discussed several methods that allow a business to reduce overhead costs and began by explaining why it is necessary to reduce overhead costs and how costs that seem necessary may not be. The second part of the article discussed a number of the ways,…
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