Variable overhead efficiency variances are unfavorable when actual cost driver activity exceeds the ________.
A) standard cost-driver activity allowed for the actual output
B) activity allowed for the expected output
C) activity allowed for the planned output
D) activity allowed for last period's output

Question

Quizplus · Accepted Answer

Variable overhead efficiency variance measures the difference between actual and expected cost driver activity. When actual cost driver activity exceeds the standard cost-driver activity allowed for the actual output, it implies that more resources were used than expected to produce the actual output, resulting in an unfavorable variance. The other options are not relevant to the calculation of the variable overhead efficiency variance.

Variable Overhead Efficiency Variances Are Unfavorable When Actual Cost Driver