The variable overhead efficiency variance:
A) is interpreted in the same manner as the direct labor efficiency variance.
B) measures the efficient use of factory utilities, factory maintenance, and factory supplies.
C) measures the efficient use of the cost driver used in the flexible budget.
D) measures the efficient use of direct materials.

Question

Quizplus · Accepted Answer

The variable overhead efficiency variance measures the difference between the actual quantity of cost driver used and the standard quantity of cost driver allowed for the actual output achieved. It measures how efficiently the cost driver was used in the production process. Therefore, choice C is the best answer. Choices A and D are incorrect because they refer to direct labor and direct materials respectively, which are not relevant to the variable overhead efficiency variance. Choice B is incorrect because it refers to factory expenses other than variable overhead, which are not included in this variance.

The Variable Overhead Efficiency Variance