When Machine-Hours Are Used as an Overhead Cost-Allocation Base and Annual

question 168

Multiple Choice

When machine-hours are used as an overhead cost-allocation base and annual leasing costs for equipment unexpectedly increase, the most likely result would be to report a(n) ________.

• A) unfavorable variable overhead spending variance
• B) favorable variable overhead efficiency variance
• C) unfavorable fixed overhead flexible-budget variance
• D) favorable production-volume variance

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Definitions:

Kumquats

Small, edible fruit resembling oranges with a sweet rind and tart flesh, often eaten whole or used in culinary dishes.

Bushel

A unit of volume that is used for measuring quantities of agricultural produce, such as grains.

Consumption

The use of goods and services by households or individuals, encompassing necessities and luxury items.

Bushel

A unit of volume that is used mainly for agricultural products, such as grains and fruits, equivalent to approximately 36.4 liters in the United States.