© 2015 EDAA. In this paper, we adopt a novel numerical algorithm, referred to as dual augmented Lagrangian method (DALM), for efficient test cost reduction based on spatial variation modeling. The key idea of DALM is to derive the dual formulation of the L1-regularized least-squares problem posed by Virtual Probe (VP), which can be efficiently solved with substantially lower computational cost than its primal formulation. In addition, a number of unique properties associated with discrete cosine transform (DCT) are exploited to further reduce the computational cost of DALM. Our experimental results of an industrial RF transceiver demonstrate that the proposed DALM solver achieves up to 38× runtime speed-up over the conventional interior-point solver without sacrificing any performance on escape rate and yield loss for test applications.