What does the variable overhead efficiency variance claim to measure?
A)changes in spending efficiency because the company paid too much for direct labour
B)changes in productive efficiency caused by the overuse of producing assets
C)changes in variable overhead costs because of the efficient (inefficient) use of direct labour
D)changes in variable overhead costs attributable to inefficient purchase of variable inputs

Question

Quizplus · Accepted Answer

The variable overhead efficiency variance measures the changes in variable overhead costs caused by the efficient or inefficient use of direct labour. This means that if the company is using direct labour efficiently, then the variable overhead costs will decrease, resulting in a positive variance. On the other hand, if the company is using direct labour inefficiently, then the variable overhead costs will increase, resulting in a negative variance. Therefore, option C is the correct choice.

What Does the Variable Overhead Efficiency Variance Claim to Measure