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EFFICIENCY VARIANCE

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difference between inputs (materials and labor) that were actually used (i.e., actual quantity of inputs used) and inputs that should have been used (i.e., standard quantity of inputs allowed for actual production), multiplied by the standard price per unit. Efficiency (quantity, usage) variance = (actual quantity standard quantity) · standard price per unit of input. The efficiency variance is unfavorable if the actual quantity exceeds the standard quantity: it is favorable if the actual quantity is less than the standard.