The variance that captures the effect of efficient use of the activity base on the cost of variable overhead is the
A)variable overhead spending variance.
B)variable overhead efficiency variance.
C)variable overhead volume variance.
D)variable overhead rate variance.

Question

Quizplus · Accepted Answer

The variable overhead efficiency variance captures the effect of efficient use of the activity base on the cost of variable overhead. This variance measures the difference between the actual hours worked and the standard hours allowed for the actual output, multiplied by the standard variable overhead rate. The variable overhead spending variance captures the effect of changes in the actual variable overhead rate, while the variable overhead volume variance captures the effect of changes in the volume of activity on the total variable overhead cost. The variable overhead rate variance is the difference between the actual variable overhead rate and the standard variable overhead rate, multiplied by the actual hours worked.

The Variance That Captures the Effect of Efficient Use of the Activity