Which variance measures the efficiency with which the firm uses inputs to produce outputs?
A)Throughput.
B)Efficiency.
C)Economy.
D)Effectiveness.

Question

Quizplus · Accepted Answer

Efficiency variance measures the difference between the actual quantity of inputs used and the standard quantity of inputs that should have been used to produce the actual output, thus reflecting the efficiency with which the firm uses inputs to produce outputs. Throughput refers to the rate of production or completion of a process, economy variance measures the difference between the actual price paid for inputs and the standard price that should have been paid to acquire the actual inputs, while effectiveness variance measures the difference between the actual output achieved and the budgeted output, reflecting the extent to which the firm achieves its goals.

Which Variance Measures the Efficiency with Which the Firm Uses