Bellow Ltd. uses direct labor hours as the cost driver for variable overhead. Which of the following items does not need to be known, in order to calculate the variable overhead efficiency variance?
A) Actual overhead costs
B) Actual direct labor hours
C) Standard variable overhead rate per direct labor hour
D) Standard direct labor hours allowed

Question

Quizplus · Accepted Answer

Actual overhead costs are not necessary to calculate the variable overhead efficiency variance. This variance only compares the actual hours worked to the standard hours allowed, and therefore only requires knowledge of actual direct labor hours and the standard rate per direct labor hour, as well as the standard direct labor hours allowed.