The variable overhead efficiency variance:
A) is interpreted in the same manner as the direct labour efficiency variance.
B) measures the efficient use of factory utilities,factory maintenance,and factory supplies.
C) measures the efficient use of the cost driver used in the flexible budget.
D) measures the efficient use of direct materials.

Question

Quizplus · Accepted Answer

The variable overhead efficiency variance measures the efficient use of the cost driver used in the flexible budget, such as machine hours, and is calculated based on the difference between the actual cost driver used and the budgeted cost driver for the actual level of production. This variance is not related to direct materials or other factory costs. While it is calculated in a similar manner to the direct labor efficiency variance, it specifically measures the efficiency of the variable overhead costs.

The Variable Overhead Efficiency Variance