When Machine-Hours Are Used as an Overhead Cost-Allocation Base and Annual

question 168

Multiple Choice

When machine-hours are used as an overhead cost-allocation base and annual leasing costs for equipment unexpectedly increase, the most likely result would be to report a(n) ________.

• A) unfavorable variable overhead spending variance
• B) favorable variable overhead efficiency variance
• C) unfavorable fixed overhead flexible-budget variance
• D) favorable production-volume variance