What is 'Efficiency Variance'
Efficiency variance is the difference between the theoretical amount of inputs required to produce a unit of output and the actual number of inputs used to produce the unit of output. The expected inputs to produce the unit of output are based on models or past experience. The difference between expected required input and actual required input can be due to inefficiencies in labor or use of resources, or errors in the assumptions used to set input expectations. 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
Yield variance describes the difference between actual output ... 
Unfavorable Variance
Unfavorable variance is an accounting term that describes instances ... 
Portfolio Variance
The measurement of how the actual returns of a group of securities ... 
Efficiency
A level of performance that describes a process that uses the ... 
Law Of Diminishing Marginal Productivity
The law of diminishing marginal productivity is an economic principle ... 
MeanVariance Analysis
The process of weighing risk against expected return. Mean variance ...

Insights
What Are Economies Of Scale?
Is bigger always better? Read up on the important and often misunderstood concept of economies of scale. 
Investing
Using Historical Volatility To Gauge Future Risk
Use these calculations to uncover the risk involved in your investments. 
Insights
Top Ten US Economic Indicators
We explain the most important economic indicators for the US economy. 
Retirement
The 3 Best Retirement Calculators For 2016
Find out the top three online retirement calculators to use in 2016 for determining how much you need to save to provide for sustainable income. 
Investing
Bet Smarter With the Monte Carlo Simulation
This technique can reduce uncertainty in estimating future outcomes. 
Investing
What's a Sensitivity Analysis?
Sensitivity analysis is used in financial modeling to determine how one variable (the target variable) may be affected by changes in another variable (the input variable). 
Insights
Basic Concept Of Absolute Advantage
Absolute advantage is the ability of an individual, country or company to produce a good or service at a lower cost than any competitor. An entity with an absolute advantage requires fewer inputs ... 
Investing
Computing Historical Volatility in Excel
We examine how annualized historical volatility is computed from daily log returns, variance and standard deviation.

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 >> 
What does an unfavorable variance indicate to management?
Learn what an unfavorable variance indicates to management, such as problems with meeting expense and revenue targets or ... Read Answer >>