What does the variable overhead efficiency variance claim to measure?
A) changes in productive efficiency caused by the overuse of producing assets
B) changes in spending efficiency because the company paid too much for direct labour
C) changes in variable overhead costs attributable to inefficient purchase of variable inputs
D) changes in variable overhead costs because of the efficient (inefficient) use of direct labour

Question

Quizplus · Accepted Answer

The variable overhead efficiency variance measures the changes in variable overhead costs that are caused by the efficient (or inefficient) use of direct labour. It compares the actual quantity of variable overhead costs incurred with the budgeted (or standard) quantity that should have been used, given the actual level of direct labour hours worked. This variance helps a company to identify how well it has managed its production process, particularly in terms of using its production inputs (such as direct labour) effectively.

What Does the Variable Overhead Efficiency Variance Claim to Measure