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

question 144

Multiple Choice

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

• A)an increase in the selling price of the product.
• B)the purchase of a new manufacturing machine costing considerably less than expected.
• C)a decline in the cost of energy.
• D)strengthened demand for the product.
• E)a competitor lowering the price of a similar product.

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