DEFINITION of 'Efficiency Variance'
The difference between the theoretical amount of inputs required to produce a unit of output and the actual amount of inputs used. In manufacturing, efficiency variance can be used to analyze the effectiveness with respect to labor, materials, machine time and other production factors.
BREAKING DOWN 'Efficiency Variance'
An important factor in measuring efficiency variance is the development of a set of realistic assumptions surrounding the theoretical amount of inputs that should be required. If the actual amount of inputs used exceeds the amount theoretically required, there is a negative efficiency variance. On the other hand, if actual inputs are less than the amounts theoretically required, then there would be a positive efficiency variance. Since the baseline theoretical inputs are often calculated for the optimal conditions, a slightly negative efficiency variance is normally expected.

Yield Variance
The difference between actual output and standard output of a ... 
Variance
The spread between numbers in a data set, measuring Variance ... 
Budget Variance
A periodic measure used by governments, corporations or individuals ... 
Sales Price Variance
The difference between the amount of money a business expects ... 
Unfavorable Variance
An accounting term that describes instances where actual costs ... 
Efficiency
A level of performance that describes a process that uses the ...

Investing
Explaining Variance
Variance is a measurement of the spread between numbers in a data set. 
Investing
Calculating Portfolio Variance
Portfolio variance is a measure of a portfolio’s volatility, and is a function of two variables. 
Small Business
Explaining Efficiency
Efficiency refers to the ability to make something with the fewest resources possible. 
Trading
Exploring The Exponentially Weighted Moving Average
Learn how to calculate a metric that improves on simple variance. 
Investing
Using Historical Volatility To Gauge Future Risk
Use these calculations to uncover the risk involved in your investments. 
Insights
What Are Economies Of Scale?
Is bigger always better? Read up on the important and often misunderstood concept of economies of scale. 
Personal Finance
How Budgeting Works For Companies
Learn how to break down and understand a corporate budget. 
Insights
Explaining Economic Efficiency
Economic efficiency is achieved when every resource is optimally allocated to minimize waste and best serve each person in that economy. 
Investing
Market Efficiency Basics
Market efficiency theory states that a stock’s price will fully reflect all available and relevant information at any given time. 
Insights
What is Productivity?
Productivity is an economic term describing the relationship between outputs as compared to inputs needed to produce those outputs.

What is price variance in cost accounting?
Understand what price variance is in relation to cost accounting. Learn the most common way price variance arises and how ... Read Answer >> 
How is an unfavorable variance discovered?
Learn how unfavorable variance is discovered through defining budget numbers, such as standard rates for labor and materials, ... Read Answer >> 
Is variance good or bad for stock investors?
Learn how high variance stocks are good for some investors and how diversified portfolios can reduce variance without compromising ... Read Answer >> 
What is the difference between standard deviation and variance?
Understand the difference between standard deviation and variance; learn how each is calculated and how these concepts are ... Read Answer >> 
How much variance should an investor have in an indexed fund?
Learn more about the significance of variance in index funds, its value as a measure of volatility and other common analytical ... Read Answer >> 
How can I measure portfolio variance?
Find out more about portfolio variance, the formula to calculate portfolio variance and how to calculate the variance of ... Read Answer >>