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

question 167

Multiple Choice

When machine-hours are used as a cost-allocation base, the item most likely to contribute to an unfavorable 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

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Definitions:

Technological Forecasts

Long-term forecasts concerned with the rates of technological progress.

Business Cycle

The natural rise and fall of economic growth that occurs over time, including periods of prosperity, recession, depression, and recovery.

Inflation Rates

The rate at which the general level of prices for goods and services is rising, eroding purchasing power.

Money Supplies

The total amount of monetary assets available in an economy at a specific time, including cash, coins, and balances held in bank accounts.