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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.

Correct Answer:

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