Yes, variable names are 2 bytes, in their stored memory location in RAM. As these must be 7-bit ASCII bytes, the sign-bits and their distribution over these two bytes is used to encode the type. And all simple variables take 7 bytes of memory in total, regardless, whether the remaining 5 bytes are actually needed to store the data or not.

  sign-bits   type (payload)

  0   0   ... floating point number (1 byte exponent, 4 bytes mantissa)
  1   1   ... integer (2 bytes)
  0   1   ... string (1 byte length, 2-bytes pointer to location)
  1   0   ... FN function (2 bytes pointer to BASIC, 2 bytes pointer to parameter variable)

In a program (the BASIC text), though, variables names are stored in full and in plain ASCII, at whatever length of characters.