Variable Overhead Efficiency Variance

The variable overhead efficiency variance is a measure of how well a company uses its variable overhead resources. It is calculated by taking the difference between the actual variable overhead costs and the budgeted variable overhead costs, multiplied by the actual level of activity.

A positive variable overhead efficiency variance indicates that the company used its variable overhead resources more efficiently than budgeted. This could be due to a number of factors, such as using less material or labor than budgeted, or having more efficient production processes.

A negative variable overhead efficiency variance indicates that the company used its variable overhead resources less efficiently than budgeted. This could be due to a number of factors, such as using more material or labor than budgeted, or having less efficient production processes.

The variable overhead efficiency variance is an important metric for managers to track, as it can help them identify areas where they can improve their efficiency and reduce costs.