If budgeted capacity exceeds the actual capacity used, there will be an unfavorable efficiency waste variance.

Question

Quizplus · Accepted Answer

When budgeted capacity exceeds the actual capacity used, it means that resources were planned for a higher level of production or activity than what was actually achieved. This discrepancy results in an unfavorable efficiency variance because the company did not use its resources as efficiently as planned, leading to waste.

If Budgeted Capacity Exceeds the Actual Capacity Used, There Will