Answer (D) is correct . Variable overhead variances can be subdivided into spending and efficiency components. However, fixed overhead variances do not have an efficiency component because fixed costs, by definition, are not related to changing levels of output. Fixed overhead variances are typically subdivided into a budget (or fixed overhead spending) variance and a volume variance.
Answer (A) is incorrect because Efficiency variances are applicable to variable costs.
Answer (B) is incorrect because Efficiency variances are applicable to variable costs.
Answer (C) is incorrect because Efficiency variances are applicable to variable costs.
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Tiny Tykes’ fixed overhead efficiency variance is