Which of the following formulae is the correct formula to measure the efficiency variance?
A)Efficiency Variance = (Actual Quantity + Standard Quantity)- Standard Cost
B)Efficiency Variance = (Actual Quantity × Standard Quantity)÷ Standard Cost
C)Efficiency Variance = (Actual Quantity ÷ Standard Quantity)× Standard Cost
D)Efficiency Variance = (Actual Quantity - Standard Quantity)× Standard Cost

Question

Quizplus · Accepted Answer

Efficiency variance measures the difference between the actual quantity of inputs used and the standard quantity of inputs that should have been used given the actual level of output achieved. The formula to calculate efficiency variance is (Actual Quantity - Standard Quantity) x Standard Cost. Therefore, option D is the correct formula. Option A is incorrect because it does not consider the actual quantity used. Option B is incorrect as it is a formula for calculating the direct material price variance. Option C is incorrect as it divides actual quantity by standard quantity instead of subtracting them.

Which of the Following Formulae Is the Correct Formula to Measure