The difference between cost variances and efficiency variances pertains to ________.
A) the difference between the static budget and actual results
B) the difference between the flexible budget and actual results
C) the difference between the flexible budget and the static budget
D) the difference between the static budget and the previous year's actual results

Question

Quizplus · Accepted Answer

Cost variances refer to the difference between actual costs and the expected costs in the flexible budget, while efficiency variances pertain to the difference between the standard or expected hours of production or activity and the actual hours used. Therefore, the difference between cost and efficiency variances lies in the type of budget used as a basis for comparison with actual results, with cost variances using the flexible budget and efficiency variances using the standard or expected hours or quantities.

The Difference Between Cost Variances and Efficiency Variances Pertains to ________