The variable overhead efficiency variance indicates to management how much variable overhead cost it may waste by not controlling the use of cost-driver activity.

Question

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The variable overhead efficiency variance measures the difference between the actual hours of cost-driver activity used and the standard hours allowed for the actual number of units produced. It helps management identify if the company is using more or fewer cost-driver hours than expected and how much variable overhead cost it may waste by not controlling the use of cost-driver activity. Therefore, the statement is true.

The Variable Overhead Efficiency Variance Indicates to Management How Much