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:

U.S. GAAP

Generally Accepted Accounting Principles in the United States, which constitute a common set of accounting rules and standards for financial reporting.

Valuation Models

Frameworks used to determine the present value of an asset or company based on assumptions about future revenue streams, growth rates, and discount rates.

Discontinued Operations

Components of a business that have been sold or otherwise disposed of, or will be disposed of, which are reported separately in financial statements for clarity on continuing operations.

Income Statement

A financial statement that shows a company's revenues, expenses, and profits or losses over a specific period of time, highlighting the company's financial performance.