What can create the variable overhead efficiency variance?
A) Efficient or inefficient usage of a specific component of variable overhead (e.g. electricity)
B) Production of units for finished goods inventory versus production for sale
C) Efficient or inefficient use of the cost driver (e.g. machine hours) for variable overhead
D) A difference between the planned level of output and the actual level of output

Question

Quizplus · Accepted Answer

The variable overhead efficiency variance is based on the difference between the actual hours of usage of the cost driver (e.g. machine hours) and the standard hours of usage for the actual level of output. Therefore, the efficient or inefficient use of the cost driver directly affects this variance. Choices A, B, and D may affect other variances, but not the variable overhead efficiency variance.

What Can Create the Variable Overhead Efficiency Variance