Which of the following formulas computes usage (efficiency) variance?
A) (Actual Quantity - Average Quantity) × Standard Price per Unit
B) (Actual Quantity - Standard Quantity) × Standard Price per Unit
C) (Actual Quantity - Fixed Quantity) × Standard Price per Unit
D) (Actual Quantity - Variable Quantity) × Standard Price per Unit
E) None of these.

Question

Quizplus · Accepted Answer

Usage variance measures the efficiency with which resources are used, and it is calculated as the difference between actual and standard quantity used multiplied by the standard price per unit. Option B is the only choice that subtracts the standard quantity from actual quantity, which is the basis for computing usage variance. Option A calculates price variance and options C and D do not make sense in this context.

Which of the Following Formulas Computes Usage (Efficiency) Variance