When Machine-Hours Are Used as a Cost Allocation Base, the Item

question 3

Multiple Choice

When machine-hours are used as a cost allocation base, the item MOST likely to contribute to an unfavourable production-volume variance is

• A)a new competitor gaining market share.
• B)a new manufacturing machine costing considerably more than expected.
• C)an increase in the cost of energy.
• D)strengthened demand for the product.
• E)an increase in the number of direct-labour hours.

---

Definitions:

Restatement Test

A doctrine used to reinterpret or clarify existing laws or legal principles, often through a secondary authoritative source that restates the law.

Privity Of Contract

The principle that contracts are binding only on the parties signing the agreement, not on any third parties.

Loan Default

The failure to meet the legal obligations or conditions of a loan, such as not making scheduled payments on time.

Sarbanes-Oxley Act

A U.S. federal law enacted to protect investors from the possibility of fraudulent accounting activities by corporations.