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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Definitions:

Level of Significance

A threshold of probability set before testing hypotheses, below which the null hypothesis is rejected.

Treatments

Specific conditions applied to the participants or subjects in an experimental study.

Total

The sum of all values in a set of numbers.

Null Hypothesis

The default hypothesis that there is no significant difference or effect, serving as a starting point for statistical hypothesis testing.