How is the variable overhead efficiency variance calculated?
A)The difference between the actual overhead rate and the standard overhead rate multiplied by the actual hours
B)The difference between the actual overhead rate and the standard overhead rate multiplied by the standard hours allowed
C)The difference between the standard hours allowed and the actual hours used multiplied by the standard overhead rate
D)The difference between the standard hours allowed and the actual hours used multiplied by the actual overhead rate

Question

Quizplus · Accepted Answer

The variable overhead efficiency variance is calculated by taking the difference between the standard hours allowed for the actual production and the actual hours used, and then multiplying that difference by the standard variable overhead rate per hour. This measures how efficiently the company used its resources in terms of time.

How Is the Variable Overhead Efficiency Variance Calculated