If the budgeted price of input is $50, actual quantity of input is 150 units and the allowed budgeted quantity of input is 60 units then efficiency variance will be __________?
Correct answer: A. $4,500
- A. $4,500
- B. $3,500
- C. $2,500
- D. $1,500
Explanation
Efficiency variance is calculated as the standard input price multiplied by the difference between actual and allowed quantities: $50 × (150 − 60) = $4,500. The excess actual quantity makes it unfavorable.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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