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.

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