Answer (D) is correct . A direct labor or materials efficiency variance is calculated by multiplying the difference between standard and actual usage times the standard cost per unit of input. The efficiency variances can be divided into yield and mix variances. Mix and yield variances are calculated only when the production process involves combining several materials or classes of labor in varying proportions (when substitutions are allowable in combining resources).
Answer (A) is incorrect because A spending variance is not the same as an efficiency variance.
Answer (B) is incorrect because A price variance is not the same as an efficiency variance.
Answer (C) is incorrect because A volume variance is based on fixed costs, and an efficiency variance is based on variable costs.
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