When machine-hours are used as a cost-allocation base, the item most likely to contribute to an unfavorable variable overhead efficiency variance is:
A)using more machine hours than budgeted
B)workers wastefully using variable overhead items
C)unused capacity
D)more units being produced than planned

Question

Quizplus · Accepted Answer

When machine-hours are used as a cost-allocation base, the variable overhead efficiency variance is influenced by how efficiently the machines are being used. If more machine hours are used than budgeted, it indicates that the machines are not being used efficiently, leading to an unfavorable variance. Therefore, using more machine hours than budgeted is the item most likely to contribute to an unfavorable variable overhead efficiency variance.

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