The variable overhead efficiency variance is computed the same as; and interpreted differently than the direct-cost efficiency variance.
Variable overhead efficiency variance = (Actual hours worked × Standard rate) – (Standard hours allowed × Standard rate) The formula can also be written in factored form as follows: SH = Standard hours allowed for actual output or production.
The difference between the actual variable overhead costs and the variable overhead expenses in the flexible budget is measured by the variable overhead flexible-budget variance. T/F The cost-allocation base's use efficiency is measured by the variable overhead efficiency variance. Because the actual hours worked exceeded the normal hours permitted to create 4,500 units throughout the month, Peterson Corporation's variable overhead efficiency variance is $10,000 negative. One or more of the following factors could provide a beneficial variable overhead efficiency variance.
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