What does the variable overhead efficiency variance tell management?

By: Thurman Schinner

Variable overhead efficiency variance refers to the difference between the true time it takes to manufacture a product and the time budgeted for it, as well as the impact of that difference.
What does the variable overhead efficiency variance measure?
What is Variable Overhead Efficiency Variance? Variable overhead efficiency variance is a measure of the difference between the actual costs to manufacture a product and the costs that the business entity budgeted for it. The productivity efficiency variance is the difference between the actual number of labor hours.
What does the variable overhead efficiency variance tell management quizlet?
What does the variable overhead efficiency variance tell management? The ________ is the difference between total actual overhead costs and the flexible budget amount for overhead costs for actual production. The number of units actually sold falls within a different relevant range than the static budget sales volume.

What causes variable overhead efficiency variance?
The variable overhead efficiency variance is driven by the difference between the actual hours worked and the standard hours expected for the units produced. One is caused by spending too much or too little on fixed overhead. The other is caused by actual production being above or below the expected production level.
What does efficiency variance tell us?
Efficiency variance is a numerical figure that represents the difference between the theoretical amount of inputs required to produce a unit of output and the actual number used in practice.
What is the variable overhead efficiency variance chegg?
Question: Variable manufacturing overhead efficiency variance is the difference between the actual activity (direct labour-hours, machine- hours, or some other base) of a period and the standard activity allowed, multiplied by the variable part of the predetermined overhead rate.
What is variable overhead variance?
Key Takeaways. Variable Overhead Spending Variance is the difference between what the variable production overheads actually cost and what they should have cost given the level of activity during a period. The standard variable overhead rate is typically expressed in terms of machine hours or labor hours.
What might a favorable direct labor efficiency variance indicate?
There is a favorable direct labor efficiency variance when the actual hours used is less than the anticipated or standard hours. This means that the company was efficient in terms of labor.
How is the variable manufacturing overhead efficiency variance calculated quizlet?

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Explanation: -The variable overhead efficiency variance is the difference between the actual machine hours run and the standard machine hours allowed for the actual volume, computed at the variable manufacturing overhead rate.
What does a favorable direct materials price variance indicate?
A favorable direct materials price variance indicates which of the following? The standard cost of materials purchased was greater than the actual cost of materials purchased.
Who is responsible for variable overhead efficiency variance?
The variable overhead efficiency variance is a compilation of production expense information submitted by the production department and the projected labor hours to be worked, as estimated by the industrial engineering and production scheduling staffs, based on historical and projected efficiency and equipment capacity
What are the causes of overhead variance?
Reason for Overhead Efficiency Variance

Poor working conditions.
Inefficiency of labor.
Poor supervision.
Poor scheduling of production processes.
Use of inferior material and defective tools.
Improperly set standards.

Which of the following is the cause of an unfavorable variable overhead efficiency variance?
An unfavorable variable overhead efficiency variance indicates that variable overhead costs were wasted and inefficiently used. Causes of a favorable variable overhead efficiency variance might include using lower-skilled workers than expected.
What do the direct labor variances tell us?
This variance tells us how efficient the direct labor was in making the actual output that was produced by the direct labor. The direct labor efficiency variance compares the standard hours that it should have taken to make the actual output Vs.
What is fixed overhead efficiency variance?
Fixed overhead efficiency variance is the difference between the number of hours that actual production should have taken, and the number of hours actually taken (that is, worked) multiplied by the standard absorption rate per hour.
What do cost variances measure?
Cost variances are a measure in business finances that demonstrate the difference between the actual cost and the budgeted amount of spend for that instance. Cost variances are an integral part of the standard costing system.

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Question: How do you calculate variable overhead efficiency variance?
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