Answer (B) is correct . The calculation of the variable overhead efficiency variance is similar to that of the direct labor efficiency variance in that both measure the effect of the difference between actual and standard hours. Assuming overhead is applied on the basis of direct labor hours, both variance calculations will be based on the same number of hours. Thus, if the direct labor efficiency variance is unfavorable, the variable overhead efficiency variance will also be unfavorable.
Answer (A) is incorrect because The efficiency variances are directly correlated.
Answer (C) is incorrect because The amount of the variance is dependent upon the actual costs incurred.
Answer (D) is incorrect because The efficiency variances are directly correlated.
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