If the budgeted price of input is $70, actual quantity of input is 250 units and the allowed budgeted quantity of input is 90 units, then efficiency variance will be ___________?
Correct answer: B. $11,200
- A. $23,800
- B. $11,200
- C. $12,200
- D. $13,200
Explanation
Efficiency variance is calculated as (standard quantity allowed minus actual quantity) multiplied by the standard price: (90 − 250) × $70 = −$11,200. The negative sign indicates an unfavorable variance, so its amount is $11,200.
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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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