The difference between the actual allocation base (actual quantity)and the amount of the allocation base that should have been used (standard quantity)times the standard cost is called the ________.
A) variable overhead cost variance
B) variable overhead efficiency variance
C) fixed overhead cost variance
D) fixed overhead volume variance

Question

Quizplus · Accepted Answer

The formula given in the question is used to calculate the variable overhead efficiency variance. This variance measures the difference between the actual amount of the allocation base used (actual quantity) and the amount that should have been used (standard quantity) to produce the actual output of goods or services while taking into account the standard cost rate for the allocation base. Therefore, the correct answer is B - variable overhead efficiency variance.

The Difference Between the Actual Allocation Base (Actual Quantity)and the Amount